Here are some of my notes from a lecture I gave in Sacramento in 2010 to other probate and estate planning attorneys. These notes were in the materials distributed to other attorneys at multiple locations throughout northern California. There is nothing that refines ones skills as an attorney like giving a lecture to one’s peers. These notes below are from the section about identifying probate and non-probate assets. I will post other sections in the coming days. I am giving a similar lecture in December. Let me know of any questions you have. -John
I. FOUNDATIONS OF ESTATE ADMINISTRATION DEFINED (8:30 – 9:30)
- Identifying Probate and Non-Probate Assets
1. General issues
A person dies, with assets, and they call their attorney. They often mix up terms like will, trust, estate, living will, payable on death, and joint tenancy to name a few. Your job, as the attorney, is to sort out what the ownership actually is, so you can determine what is needed to clear title to the assets in the most efficient manner possible, so that you can advise your client. There are various forms of administration, including probate avoidance, which will be discussed later. The key first step is get a good grasp on all possible assets.
There are a number of questions that you will ask, which will be discussed below, in determining what is best for the client. However, I would say it’s common to start with a focus on the assets. What did the person have, how (exactly) was title held, where are the assets located, are there potential claims against the assets.
Many people use $100,000 as the magic number in probate to determine what type of probate section to use. However, that number is just a guide as the type of asset, titling on asset, creditors, family structure and other issues help you determine which administration option to select. There may be cases where there is less than $100,000 but a full probate makes sense. There may be cases where assets exceed $100,000 but due to titling or beneficiaries a mini probate option is available.
A lot of clients are in a state of shock/bereavement at this stage so important to slowly walk them through all potential assets. Keep suggesting possible assets even after they tell you “that’s it, nothing else….”
Verify asset titling when possible. You can ask clients to bring in bank records which often clarify if it’s a probate or a non-probate asset. It’s important to get as much documentation as possible so ask for copies of bank statements and information about assets (such as year, make, model, mileage and condition of cars)
PRACTICE POINTER: Having access to an on-line deed service is really crucial as it’s the easiest way to check title to real estate and often shows mortgages as well.
Knowing what all the assets are will help you determine if a full probate is needed and will help you better understand all the options. Plus, a later discovered asset can cause a selection option to be completely wrong and require starting administration over. It thus is imperative to get all possible asset information from your client.
The personal representative (“PR”) has the right to possession of all probate assets. Generally speaking this does not include property held in joint tenancy, trust, with a death beneficiary named, and the like.
Death Beneficiary: If an asset has a death beneficiary such as life insurance, IRA’s, 401k’s, other retirement accounts and payable on death accounts (“POD’s”) the asset is generally not part of the probate unless the estate is named or if there is no living named beneficiary.
If a full probate is the best option there are many weapons available to the PR to get assets into the probate estate. Three commonly used ones are as follows:
California Probate Code 850 is used often in trust cases where assets have been omitted from trusts (i.e. “Heggstad petitions.”). However, it can also be used in probate cases. In pertinent part PC 850 provides:
“(a) The following persons may file a petition requesting that
the court make an order under this part:
(2) The personal representative or any interested person in any of
the following cases:
(C) Where the decedent died in possession of, or holding title
to, real or personal property, and the property or some interest
therein is claimed to belong to another.
(D) Where the decedent died having a claim to real or personal
property, title to or possession of which is held by another….”
PC 850 is a hammer which can be used to bring assets into the probate estate. In my experience it’s a common way to unwind joint tenancy’s among other things.
California Probate Code 8870 is not often used but it is important to remember it’s there if needed. In full it provides:
“(a) On petition by the personal representative or an interested person, the court may order that a citation be issued to a person to answer interrogatories, or to appear before the court and be examined under oath, or both, concerning any of the following allegations:
(1) The person has wrongfully taken, concealed, or disposed of property in the estate of the decedent.
(2) The person has knowledge or possession of any of the following:
(A) A deed, conveyance, bond, contract, or other writing that contains evidence of or tends to disclose the right, title, interest, or claim of the decedent to property.
(B) A claim of the decedent.
(C) A lost will of the decedent.
(b) If the person does not reside in the county in which the estate is being administered, the superior court either of the county in which the person resides or of the county in which the estate is being administered may issue a citation under this section.
(c) Disobedience of a citation issued pursuant to this section may be punished as a contempt of the court issuing the citation.
(d) Notice to the personal representative of a proceeding under subdivision (a) shall be given for the period and in the manner provided in Section 1220. Other persons requesting notice of the hearing pursuant to Section 1250 shall be notified by the person filing the petition as set forth in Section 1252.”
California Probate Code 9611 is another useful tool as it’s a general catch all when there is not another section exactly on point to what you are trying to do. PC 9611 provides in full:
“(a) In all cases where no other procedure is provided by statute, upon petition of the personal representative, the court may authorize and instruct the personal representative, or approve and confirm the acts of the personal representative, in the administration, management, investment, disposition, care, protection, operation, or preservation of the estate, or the incurring or payment of costs, fees, or expenses in connection therewith. Section 9613 does not preclude a petition for instructions under this section.
(b) Notice of the hearing on the petition shall be given as provided in Section 1220.”
PRACTICE POINTER: Though I generally like to start the probate process quickly, all options should be considered before an administration option is selected. A false start can cause a lot of extra work.