I have had more than one client visit me with inheritance situations like the one described in the title. In Arizona, a valid Last Will (or a trust, or survivorship or beneficiary designations) controls who is entitled to property when someone dies. If none of these things were set up, then after bills are paid, Stepdad (or Stepmom) is entitled to 1/2 the estate, stepkids (children of the deceased) split the other half. Stepparent also gets certain amounts as priority payments (I.e. before the stepkids or most creditors get paid). They do not get to hide or take stepkid’s share, though they can hold it for a while in some cases if stepkid is a minor or incompetent.
If Stepdad wrongfully takes a stepkid’s share of the estate, the stepkid can file a probate and get double the value of the property wrongfully withheld. Today’s case happened in California, but Arizona has a similar law.
In a nutshell, Mr. Staggers kept all his wife’s assets when she died, and did not give his two stepkids the share they were entitled to get. They sued. During the suit, Mr. Staggers died, and his son was appointed as his personal representative to resolve the lawsuit. Son filed a motion to terminate the double damages claim, citing a 2008 case and arguing that since Mr. Staggers is dead, his estate can’t be punished with double damages under a specific California code section eliminating “punitive or exemplary damages” against estates. He also wanted to throw out the requested attorney’s fees, which he argued were also punitive. Stepkids argued the 2008 case was dicta, a non-applicable ruling about a different issue, and cited an 1866 case (issued a year after the Civil War ended) arguing the opposite.
The trial court found the 1866 case did not apply because the current code section didn’t exist in 1866, and entered summary judgment against stepkids. Stepkids appealed, and got the summary judgment reversed. The Appellate court said “Yes, the double damages and attorney’s fees are demonstrative and punitive in nature, but they are statutory damages, rather than punitive damages which have to be proved by clear and convincing evidence along with evidence of defendant’s bad faith and his net worth. So attorney’s fees and double damages can be awarded against the estate.”
So now the case goes back to the trial court for an actual trial (not just summary judgment, i.e. trial by motion) against a dead man’s estate over a dead woman’s estate. Meanwhile, years have passed and attorneys on both sides have been paid lots of money. Stepdad’s estate may have to come up with the stepkids’ share of Mom’s estate, plus double damages, plus attorney’s fees to repay the stepkids. Someday. If they win. And if there is any money left. It is unlikely that Mr. Staggers contemplated any of this when he took his wife’s assets for himself. For all we know, his wife wanted him to have everything, but didn’t write up a will to make that clear. On the other hand, maybe he deliberately ignored her wishes. Either way, unless his son beats this lawsuit, Mr. Staggers’ estate will eventually be asked to pay the price. The Feb 18, 2016 appellate decision in the case (Hill v. Superior Court) is here.
Moral of the story: 1) Mr. Staggers should have talked to an attorney before making asset distributions to himself; and 2) Mrs. Staggers should have used proper estate planning such as Wills, life estates, beneficiary designations, and beneficiary deeds to avoid this kind of fight and make sure her estate automatically went to the people she wanted it to go to. A good attorney now can help save tens or hundreds of thousands of dollars later. At least that’s the moral I got.