By M. Jude Egan, Ph.D., J.D., Certified Family Law Specialist — Egan Law, Santa Maria, California
Why does second-marriage estate planning in California matter? The story of Hanako Nelson answers that question better than any hypothetical could.
The Case That Should Have Changed Everything
In 2000, a woman named Hanako Nelson walked into an estate planning attorney’s office in the Bay Area, California. Hanako had been married to William Nelson since 1981. She had two sons from a prior relationship—Gary and Jay Wilkin—and she wanted to make sure they were provided for. She owned a separate property rental home in Goleta. She wanted that home, and whatever else she could leave them, to go to her boys.
The drafting attorney prepared a trust and a pour-over will. He had one phone call with Hanako. His staff prepared the documents. He drafted over three hundred trusts a year using this model. Hanako signed. The documents went into a binder. And for the next sixteen years, everyone assumed the estate plan said what Hanako intended.
It did not.
When Hanako died in 2016, her sons discovered that the pour-over will’s residuary clause was drafted to transfer all of Hanako’s property—community and separate—into the trust. The trust, in turn, had been drafted without any meaningful analysis of what was community property and what was separate property. The drafting attorney knew that the Goleta rental home was Hanako’s separate property because it was titled in her name alone. What he did not know—because he did not ask, and because he did not understand community property law in sufficient depth—was that the community had acquired a 100% interest in a property titled solely in William’s name. His failure to understand and explain this to Hanako defeated her intent to leave “all my property” to her sons.
I was involved in the appeal. The case is Wilkin v. Nelson (2020) 45 Cal.App.5th 802. The trial court found—and the Court of Appeal affirmed—that the drafting attorney had committed malpractice. The court noted that Hanako “was treated badly by those who should have advised her in the process” and that “had they respected her intelligence and ability to understand, … they would have discussed these things with her.” The family endured a four-day trial to determine what was and was not community property—a trial that should never have been necessary. Each side spent several hundred thousand dollars. The appellate opinion, while legally significant for its holding on reformation of pour-over wills, is also a quiet indictment of an entire industry: the high-volume, low-cost trust drafting model that treats estate planning as a form-filling exercise rather than a substantive legal analysis.
Hanako Nelson deserved better. And her story—which I have seen repeated in different forms across hundreds of cases—is the reason I believe that no second-marriage estate plan should be drafted without a Community Property Audit.
Estate Planning Is Not a Form-Filling Exercise
There is no shortage of options for “doing a trust.” You can download one online. You can hire an attorney who will produce one for $1,500 or less. In either case, you will receive a document that satisfies the formal requirements of the California Probate Code. You will have a trust. You will have a pour-over will. You will have ancillary documents in a handsome binder.
But from the litigator’s perspective—and I have litigated trust disputes for many years—a pre-printed trust drafted without substantive analysis of community and separate property can actually increase the likelihood of post-death litigation. The trust creates an illusion of order: everything is organized, everything is in a binder, therefore everything must be handled. In reality, the trust’s operative provisions—the two or three paragraphs that actually direct how assets are distributed—were drawn quickly from a questionnaire. There is no distinction between community and separate property. There is no analysis of commingled accounts, Moore/Marsden interests, or transmutation issues. The drafting attorney did not have time for that analysis, and may not have had the expertise to conduct it.
The Probate Code’s very first operative provision—section 100, subdivision (a)—says that upon the death of a married person, one-half of the community property belongs to the surviving spouse. That single sentence incorporates the entire California Family Code—sections 760 through 772, the transmutation requirements of sections 850 through 852, every tracing methodology, every characterization presumption—into every probate proceeding involving community property. An estate planning attorney who does not understand this body of law is drafting blind.
Three Scenarios That Illustrate the Problem
The following scenarios are drawn from patterns I encounter regularly in my practice. Each one involves a trust that was drafted without a Community Property Audit. Each one resulted in—or is heading toward—litigation that thoughtful planning would have prevented.
The Dentist’s Daughter
A dentist on the Central Coast built a practice with his first wife over thirty years of marriage. When his first wife died, the practice was healthy and strong. The dentist remarried approximately two years later—a woman who worked for him. In the flush of new love, he sold the family home his daughter had grown up in and bought a much larger house in an exclusive neighborhood. His new wife’s daughter moved into a guest house on the property. When the dentist died, his second wife inherited the house as community property because her name was on the title.
The dentist’s daughter called my office. Her stepmother had told her plainly: “When I die, my daughter will inherit the house and decide what to do with it.” The proceeds from the sale of the family home—the home the dentist had shared with his first wife, the home his daughter grew up in—had been used to acquire the new property. Those proceeds were arguably traceable separate property, or at minimum created a Family Code section 2640 reimbursement claim. The community interest in the new home, if any, depended on whether community funds had contributed to the mortgage, improvements, or carrying costs. None of this was analyzed when the estate plan was drafted. The trust treated the home as community property because that is what the title said—and under Marriage of Valli (2014) 58 Cal.4th 1396 and Estate of MacDonald (1990) 51 Cal.3d 262, title alone does not determine character.
Did the dentist really intend for a $3 million home—purchased with the proceeds of the house he shared with his first wife—to pass to his second wife’s daughter rather than his own? No thoughtful drafting attorney would have failed to ask that question. No competent characterization analysis would have missed the separate property tracing issue. But nobody did the analysis, because nobody conducted a Community Property Audit.
The Widow’s “Comparable Accommodations”
A wealthy mother dies leaving a trust for the benefit of her second husband of nearly thirty years. The trust provides that the husband may live in her separate property home—which was paid off before the second marriage—for the rest of his life, at the trust’s expense. If he decides to move out, the trust will pay for “comparable accommodations.” The mother’s daughter is named as successor trustee.
The husband moves out and remarries within ninety days of the mother’s death. He asks the trust to pay for “comparable accommodations” for his new living arrangement. He later alleges that “comparable accommodations” includes full-time skilled nursing care if that is what he wants.
Now the daughter—as trustee—faces an impossible question: How much money should she set aside for decades of “comparable accommodations” for a man who remarried within three months of her mother’s death? The trust does not define the term. It does not address remarriage. It does not cap the obligation. It does not specify whether “comparable” means comparable to the home’s value, its size, its neighborhood, or its monthly carrying cost. And it does not address whether the obligation survives the husband’s remarriage or changes in circumstances.
The mother could not have predicted that her husband would remarry so quickly. But a thoughtful drafting attorney would have anticipated the question: What happens if the surviving spouse’s circumstances change? What if he moves? What if he remarries? What does “comparable” mean? These are not exotic hypotheticals. They are the bread-and-butter questions of trust administration. An estate plan that does not answer them is not an estate plan. It is a set of instructions with the hardest questions left blank.
The Long Marriage with No Plan
Two spouses, both on their second marriage, approaching their twenty-fifth anniversary. They have a combined asset portfolio of approximately $10 million in real property and investment accounts. Each has adult children from first marriages. Neither has children with the other. Each has separate property assets—Wife has more than Husband because of inheritance. Neither has attempted to value or characterize those assets. Neither entirely trusts the other not to leave the estate to their own children at the expense of the stepchildren. It is more unease than distrust, but it is real.
Each spouse wants two things: first, income and housing security for the surviving spouse—no one wants to be in a position of having to ask their stepchildren for permission to spend their own money. Second, assurance that their own children will not be disinherited. These are entirely reasonable goals. They are also in direct tension with each other.
And they have a very difficult time talking about it. After twenty-five years, it feels adversarial to say, “I want to make sure my children get their share.” It feels disloyal. It forces both spouses to confront the “macabre gamble”—neither knows which of them will die first—and to plan for a future in which one of them is gone and the other is navigating a financial landscape with competing beneficiaries.
Why Good Intentions Are Not Enough
In each of the scenarios above, the couple had good intentions. The dentist wanted to provide for his second wife. The wealthy mother wanted to ensure her husband had housing security for life. The long-married couple wanted to care for each other while protecting their children. Nobody acted in bad faith. Nobody intended to disinherit anyone.
But good intentions, without accurate property characterization and precise drafting, produce ambiguous trusts. And ambiguous trusts produce litigation.
Consider the most common “solution” I see: the spouses agree that whichever dies first, the survivor can use the entire estate as though it were community property, and when the survivor dies, whatever remains will be divided equally among all children and stepchildren. This sounds generous and fair. It is, in practice, unenforceable.
If the surviving spouse has unrestricted access to the estate, there is nothing to prevent her from giving assets away to her own children during her lifetime. She can sell real estate at a reduced price to her daughter. She can retitle brokerage accounts with pay-on-death designations naming her children as beneficiaries. She can purchase life insurance that passes outside the estate. She can make gifts. She can spend down the principal. By the time she dies, the estate may be a fraction of what it was—and the “equal division” provision divides whatever is left, which may be very little.
The decedent’s children have no recourse. Their parent’s intent—that the children share equally—was defeated not by bad faith, but by a trust structure that gave the surviving spouse the power to defeat it. This is the predictable consequence of an estate plan drafted without accurate characterization and without structural protections.
The A/B Trust: Old Wine Bottles, New Wine
The solution to this structural problem already exists. It is the A/B trust—sometimes called the Survivor’s Trust and Bypass Trust—a vehicle that was originally designed for estate tax planning but is increasingly useful for a different purpose entirely: protecting inheritances in second marriages while providing for the surviving spouse.
Traditionally, the A/B trust split the estate into two trusts upon the death of the first spouse. The A trust (the Survivor’s Trust) held the surviving spouse’s share, which the surviving spouse could access freely. The B trust (the Bypass or Credit Shelter Trust) held the decedent’s share up to the estate tax exemption, with the surviving spouse receiving income and interest but unable to invade principal. The B trust bypassed the surviving spouse’s estate at death, reducing the estate tax burden.
A/B trusts fell out of favor for two reasons. First, the federal estate tax exemption is now over $13 million per person—$27 million for a married couple with portability—a threshold that most estates do not approach. Second, portability itself made the bypass structure unnecessary for tax purposes. But the A/B structure has a new and compelling purpose in second-marriage estate planning.
When the couple conducts a Community Property Audit and then creates an A/B trust, the result is an estate plan that solves both problems simultaneously. Each spouse’s separate property and their half of the community property can be allocated between the trusts in a way that protects the decedent’s children while providing for the surviving spouse. The B trust becomes irrevocable at the first death, with beneficiary designations that cannot be changed by the surviving spouse. The surviving spouse receives income from the B trust and has full access to the A trust. The surviving spouse is cared for. The decedent’s children’s inheritance is protected.
Because we are no longer constrained by the estate tax exemption threshold, the B trust can be funded with whatever amount the spouses agree upon—not just the exemption amount. The parties can agree that the family home carries a portable interest, so the surviving spouse can downsize and retain access to the equity, including the decedent’s share. They can agree that certain accounts are irrevocably earmarked for the decedent’s children. They can build in guardrails for invasion of principal—health, education, maintenance, and support standards—that give the surviving spouse access in genuine need while preventing a wholesale transfer of assets to the surviving spouse’s children.
This is filling old wine bottles with new wine. We use a tried-and-true estate planning vehicle to solve the increasingly modern problem of providing for the children of first marriages while caring for the spouse of the second marriage. But the vehicle only works if it is built on accurate characterization. The Community Property Audit tells us what is yours, what is mine, and what is ours. From that understanding, the estate planner can structure the A and B trusts to serve both interests with precision rather than hope.
The Rainbow Bridge: Why Families Fight After You Die
I want to address something that most estate planning attorneys will not tell you, because it is uncomfortable and because it sounds pessimistic. It is neither. It is the product of decades of watching families come apart after a death.
You may want to believe that your children will not fight with their stepparent. You may point to an unusual bond between your children and your second spouse—a stepparent who has been in their lives for decades, who they genuinely love, who they chose to love. You may point to a closeness between stepsiblings that rivals blood kinship. You may observe, correctly, that your children are entitled to nothing—it is your money, and if there is a nickel left over, they should be grateful for it.
Please do not be fooled.
You are the rainbow bridge of love and affection between your children and their stepparent. You are the reason they sit at the same Thanksgiving table. You are the connective tissue. When you die, the bridge weakens. When your children begin to watch their stepparent favor their own child with money your children perceive as their rightful inheritance, bad feelings emerge quickly. People fight over even small scraps of money. Greed settles in with surprising speed. Old resentments surface. The warmth that characterized the blended family during your lifetime can evaporate within months of your death.
I took an informal poll recently of six judges at a dinner event. After several bottles of wine had been shared, I asked: which is more difficult—trust litigation or divorce litigation? All six, without hesitation, said trust litigation. I believe this is because spouses loved each other at one time. Siblings and stepsiblings never had to love each other. And when a parent dies in a late second marriage, the stepparent and stepchildren may have no relationship at all—or an actively hostile one—that was masked only by the presence of the now-deceased parent.
Trust litigation is worse than divorce litigation. I have done both for many years. In divorce, there is at least the possibility of a fresh start. In trust litigation, there is only the backward-looking question of what the dead person intended—answered by people who cannot agree on what day of the week it is, let alone what their deceased parent meant by “comparable accommodations.”
The Estate Plan as a Love Letter
A proper estate plan for a second marriage should cost approximately $5,000 in attorney’s fees for the drafting, in addition to the $6,000 to $12,000 for the Community Property Audit that precedes it. This is a significant investment. It is also a fraction of the cost of the litigation it prevents.
Your drafting attorney should develop a full and complete picture of your community and separate property assets before writing a single word of the trust. The attorney should understand the Family Code—not just the Probate Code. The attorney should ask the questions that the drafting attorney in Wilkin v. Nelson did not ask Hanako—questions about what is yours, what is your spouse’s, and what is shared. The attorney should ascertain your wishes with specificity: not just “my spouse gets the house,” but what happens if your spouse wants to downsize, needs care, remarries, or predeceases the trust’s termination. Every foreseeable contingency should be addressed. Every ambiguous term should be defined.
It can be emotional. It can feel hurtful to have these conversations. It requires both spouses to acknowledge truths about their financial lives that they may have avoided for years. But working through the issues now—with the guidance of an attorney who understands both family law and probate law—saves the people you love from the worst kind of legal fight: a fight over your memory, conducted in a probate courtroom, between people you loved who cannot agree on what you wanted.
Hanako Nelson wanted to leave her property to her sons. A drafting attorney who did not understand community property law defeated that intent. Her family spent years in litigation and hundreds of thousands of dollars to reach an outcome that a $15,000 investment in a Community Property Audit and a thoughtfully drafted trust would have guaranteed from the beginning.
A proper estate plan is a love letter to your spouse and your children. It says: I understood what I owned. I thought about what you need. I had the difficult conversations. I built a plan that works—not because I filled in a form, but because I cared enough to get it right.
This article is for informational purposes only and does not constitute legal advice. Every case is unique. Consult a qualified attorney for advice regarding your specific situation. Egan Law · Santa Maria, California · (805) 332-3984 · judeeganlaw.com
