Blog

Bad deeds

I have had multiple cases recently where title companies have refused to honor deeds recorded around the time of death. That is, the person just before death signed a deed to transfer the property to another. In each case the facts are slightly different.

Before I explain more let me tell you that, in my personal opinion, title companies can be above the law. What I mean is that the laws may say a certain deed meets the legal requirements to transfer title but that doesn’t mean a title company will honor that.

Sometimes maybe the title company is actually technically correct and other times I am not so sure. In my opinion title companies are more suspicious when a deed is recorded just before or just after death. I think they look at them more critically. Also, the homemade and often handwritten deeds draw critical review.

You need to be careful in preparing deeds. A deed is not to be taken lightly as it’s a major and significant legal document.

Things to look out for:

– Double check your legal description and then triple check it for accuracy. That’s what we do.
– I would list the address and APN number to make it easy for people.
– Do not try and sign a deed by way of a general power of attorney. “Specific” POAs are required.
– When possible record deeds as soon as possible and preferably before death.

Failure to get the deeds right can end up in a visit to the probate court!

Good luck! -John

Estate planning lessons from other’s mistakes

On March 11, 2016 I got the call of a lifetime… and I do not mean that in a good way. I got the call from the police, in Logan, Utah, that my mother had been shot to death by her husband. This is not a post about domestic abuse, gun control or mental health awareness. That’s not the point of my webpage. This is an estate planning and probate website so let’s talk about those aspects of this horrible situation. First of all I have posted before, since my mom’s death, about some of things I learned. I want to take those posts and go a step further here. I want you to be able to learn from other’s mistakes.

Just last week I paid off her mortgage. You would think that would be easy to do, right? That is, I have my mom’s money, my mom owed the bank some money, and therefore 2 + 2 should equal four. I have dealt with this before so it wasn’t a shock… though parts of it are a little surprising. If a person owes a bank money you would think the bank would make it really easy to pay, right? Let me tell you they do not! I have seen this before with clients and it can be horrible. My situation was better than many I have seen. Without online access if you call the mortgage company they won’t talk to you. They will not share any information generally. In my mom’s situation I was able to access her online account which enabled me to find out the payoff amount. The online account was already linked to her bank account. Thus it made it pretty easy. However, there was extra money in the mortgage impound account. Some call it an escrow account. Since the mortgage was in the name of Mary Palley and not the Mary Palley Trust they sent me a check made payable to Mary Palley. So what do you do with a check made payable to a dead person?

This is certainly not the first time this has come up for me in the last year. There was a small insurance refund, a magazine refund, a cable tv refund, a credit card refund and several other checks of small amounts of money. They were all made payable to my mom individually and not her trust. I have heard of people leaving a bank account open in the name of the deceased person. I can not say if that’s technically correct but I would err on the side of saying it’s probably not technically correct. I thus can’t endorse that plan. Instead, the proper thing to do, when there is no probate, is to send the check back to the issuer along with a small estate affidavit. In California, anytime the probate assets are under $150,000 a full probate is not required and small estate affidavits may be used to clear assets. In Utah that amount is $100,000. Luckily my mom’s estate qualifies so I have used the small estate affidavits for several small checks. It does feel wrong to mail back checks but it is the technically right thing to do. They usually get re-issued and returned within 2-3 weeks in my experience.

Then the question is who should the checks be made payable to when you do a small estate affidavit? I think an argument could be made to pay them to the decedent’s trust and an argument could be made to pay them directly to the beneficiary or beneficiaries of the trust. I do think technically speaking payment to the trust is probably the most accurate. Thus the small estate would be signed by the trustee of the trust asking for payment to be made to the trust. You would then deposit the money into the trust account, in this case the Mary Palley Trust, and then you can distribute from there.

So if you have a mortgage and a living trust I encourage you to connect that mortgage to the living trust. We advise clients to do this but didn’t do our own that way. What’s that saying about a cobbler’s child….

Also, if you do a re-finance try to do the re-finance in the name of the trust.

Lastly, a new mortgage should be taken out in the name of the trust if it’s allowed and doesn’t have any extra cost.

What else besides connecting mortgages to trusts? Other lessons learned?

I think consolidation into a trust account continues to be my biggest issue. I spent countless hours gathering a small value of stocks… though very well diversified. It would be much easier if people, before dying, are able to organize all their stocks into one or more brokerage accounts. Make sure those brokerage accounts are opened in the name of your trust! It’s not hard to do and saves a ton of work by your loved ones after death.

The same is true of cash accounts, CD’s, money markets, checking, savings, and just about any other financial account. Other than IRA, 401k and retirement accounts just about all accounts should be owned by your trust.

Consolidate, consolidate, consolidate!

LESS IS MORE!

The less accounts the better. You need to be mindful of FDIC limits (currently $250k per bank) but otherwise consolidate!

Bonds are another one we see. Get those federal bonds put into a federal bond account in the name of your trust.

Think ahead by doing stuff while you are mentally capable. Your loved ones will thank you!

Also, if you are thinking about updating your trust just do it! Do not delay. Stuff happens! I hate to say that but it’s true. You aren’t promised tomorrow so if you have changes to make then make them!

I have posted on this general topic several times but I shouldn’t make it sound like I am just a complainer. My mom was nice enough to have a living trust, have most of her assets owned by the living trust, and generally left pretty decent financial records. I feel loved that she took the time to set things up as well as she did.

Much more importantly she taught me well! I can never thank her enough for all she did for me.

With much love, RIP Mary Flynn Palley, 1942-2016.

-John

P.S. Here’s a picture of my mom at her UCLA School of Law graduation about 1979

Carne v. Worthington (2016) 246 Cal.App.4th 548 – Heggstad petitions with trusts

You likely know that CaliforniaProbate.info tries to stay up on all “Heggstad” related news. As the owner of www.heggstadpetition.com it is imperative that I keep up-to-date on these cases. We advise clients, and potential clients, almost daily about the nuances of a Heggstad petition.

As you likely know a “Heggstad” petition is a probate court petition brought pursuant to California Probate Code 850. The primary goal of a Heggstad petition is to get an asset into a trust that was not properly titled as such. The common scenarios we see are:

1) the person set up the trust themselves, without the aid of an attorney, and failed to properly “fund” the trust;

2) the person set up the trust with an inexperienced or sloppy attorney who did not help the client properly fund the trust;

3) the asset was acquired after the trust establishment and the trust was not properly funded;

4) the person did a re-finance on their house, the title company moved the property out of the trust, and failed to put the property back into the trust.

The seminal case was the Estate of Heggstad in 1993. That case looked about like this:

Estate of HALVARD L. HEGGSTAD, Deceased.

GLEN P. HEGGSTAD, as Trustee, etc., Petitioner and Respondent, v. NANCY RHODES HEGGSTAD, Objector and Appellant.

This case was groundbreaking and has been used countless times to successfully fund trusts after death. Estate of Heggstad, (1993) 16 Cal.App.4th 943).

In 2015, as you have read on my blog before, the courts went further than Heggstad with the case: Ukkestad v. RBS Asset Finance, Inc. (2015) 235 Cal.App.4th 156. This case was essentially Heggstad on steroids and made it even easier to get assets into a trust after death.

Now it’s time to go further! The latest case in the Heggstad family is Carne v. Worthington (2016) 246 Cal.App.4th 548. Mentioning Heggstad, by name, over 20 times the court took Heggstad further.

As you know intent is still the key with “Heggstad” petitions. The required showing of intent is just less than it used to be. In most California courts this has been a problem for real estate. That is, most courts have been comfortable getting personal property (such as bank accounts) into a trust without much specific showing of intent. Something along the lines of “I intend for all my assets to be in this trust” has been enough in many cases. However, getting real estate transferred after death took more than that.

With Ukkestad and now Carne I believe with either personal property or real estate you should have a very good chance of getting assets put into a trust. Intent is still needed but that showing of intent probably does not have to be as specific as it used to.

Of course I am just providing GENERAL information here. Each case is unique and you should review your facts with an experienced Heggstad lawyer. As an attorney that has successfully performed dozens and dozens, if not over 100, Heggstad petitions I can very quickly give you my professional opinion. That is not an opinion based on reading law books and theory but actually DOING these cases. I believe I have an extremely good sense of what will work in most courts.

Also, it’s important to keep in mind that sometimes a Heggstad is not the right approach. For example, if the asset in question is worth less than $150,000 there is likely a better way to get the asset into the trust; a more sure way that does not cost more. So, again, evaluate your options with an experienced estate attorney.

The attorney you talk to should know about Heggstad, Ukkestad, and Carne!

Best of luck to you. -John

Calendar Notes in Probate Court

You get calendar notes in your probate court case. Now what do you? Every county is different. Some counties post calendar notes (or “tentative rulings”) a day before the court hearing and some do it a month before. Some do not post anything and you appear in Court and see what the Judge has to say. For those that do post notes how quickly can you or your attorney reply?

We pride ourselves on efficiency. We file probate cases extremely quickly. Time is of the essence in most probate cases as people, typically, want to move on from the death of their loved one. Or maybe they waited a while before having the emotional energy to deal with probate so there could be some issues developing like a house in foreclosure. EFFICIENCY IS KEY!

Few of us are perfect. Having filed over 1,000 probate cases we still get calendar notes to address. Sometimes they are mistakes we made and sometimes, dare I say it, it is at least possible that the court missed something in their review of the file. The key is filing something FAST to try and preserve your Court date.

Here are actual notes from our case. This is a public record but I still removed the name:

16. S-PR-XXXXXXX ___________. – In Re the Estate of
Missing proof of publication.
Missing required allegations at ¶ 5a(3)-(4) (RDP).
Proof of subscribing witness appears incomplete. Additional representations are needed; see Prob.C. §§ 8220(a) & 6110(b)-(c).

So first question is how quickly do you or your attorney get the notes? some counties, like Sacramento, email us as soon as the notes are posted. Others have to be checked manually. For those we check at least once a day and, as the court date gets closer, multiple times a day. We want to find out your notes as soon as possible so we can fix anything that needs to be fixed.

Then what?

The above notes are not uncommon.

Note 1 “Missing proof of publication.” We had a close Court date and the publication takes a few weeks. The newspaper often files just days before the court date so that’s a common note.

Note 2 “Missing required allegations at ¶ 5a(3)-(4) (RDP).” We missed one box. Did the decedent have a registered domestic partner. Out of, approximately 1,000 probate cases, I have only checked that one a couple times. It’s pretty rare. To fix we really need a verified supplement signed by our client. We got her a document to sign within a half hour of seeing the note. She printed, signed, emailed back to us, and we “fax filed” it the same day. So that’s cleared.

Note 3 “Proof of subscribing witness appears incomplete. Additional representations are needed; see Prob.C. §§ 8220(a) & 6110(b)-(c).” In some cases the will was not prepared with correct language which requires us to have to track down one of the will witnesses and have them sign a form about the execution of the document. A lot of times that will signing was 20 years ago so they might not remember. This note is a tough one. I think it’s arguable that the witness checked the boxes which they recalled but the court wanted more. So we discussed it with them and then filed an amended proof of subscribing witness form.

The point is these things happen. A large percentage of cases have calendar notes. The keys are: 1) finding the calendar notes as quick as possible to maximize the time you have to fix them, 2) determining what you need to do to address the notes, 3) efficiently addressing the notes to the Court’s satisfaction.

We got our calendar notes Friday morning for a Wednesday hearing. Only a few days and the Monday was a court holiday. WE GOT IT APPROVED ON-TIME THOUGH!

Good luck in your probate cases! -John

FAST probate in California….

Did you know you can request your first probate court hearing be hearing in only 30 days? The California probate code specifically authorizes this at California probate code 8003. Here is the text of that section:

8003. (a) The hearing on the petition shall be set for a day not
less than 15 nor more than 30 days after the petition is filed. At
the request of the petitioner made at the time the petition is filed,
the hearing on the petition shall be set for a day not less than 30
nor more than 45 days after the petition is filed. The court may not
shorten the time for giving the notice of hearing under this section.
(b) The petitioner shall serve and publish notice of the hearing
in the manner prescribed in Chapter 2 (commencing with Section 8100).

In counties like Sacramento the first hearing date might be 3 months out so invoking PC 8003 may be wise. This is certainly something to ask your attorney about because it is not automatic… regardless of what the code section says.

For our clients who are in a special rush we invoke PC 8003 to help them achieve a fast probate… or at least faster probate.

If you are interested in the most efficient probate process possible contact us to discuss your case.

-John

New Years Resolutions

Each year I am told of clients who had a new years resolution to “Get our estate plan done this year….” Each year they tell me they failed to do it until finally they came to see me. Often they tell me “the estate planning process was much easier than we thought it would be….” Maybe YOU have been procrastinating about getting your estate plan done!? Maybe you have young children… or not so young anymore as you are busy. Maybe you have assets that you are concerned about taxes, probate, and even just kids WASTING the money. GET YOUR ESTATE PLAN DONE! I strongly believe that DONE IS BETTER THAN PERFECT! You may never have your thoughts organized 100%. You may never agree with your spouse on everything. There may always be one more change about to happen. DONE IS BETTER THAN PERFECT! Protect yourselves, protect your family, protect your loved ones, avoid attorney fees, avoid taxes, and GET YOUR ESTATE PLAN DONE NOW! New years is the best time to do it! Here’s to a great 2017 to you and yours! -John

Stuff happens… so finish your estate plan

Every year it happens. Every year I get to the end of the year and am amazed that some people I met with months ago have not finished their estate plans yet. People who have had rough drafts mailed to them long ago. People who have been reminded that they should get it done.  People who might be causing probate, family fights, estate taxes, or other problems by not getting their estate planning documents done. Please remember that STUFF HAPPENS!

I am blogging today with a reminder to people to finish your estate planning documents.  If you haven’t met with an attorney then go do that.  As you likely know mere discussion, and even unsigned documents, provide no protection. That is, the reasons that people do an estate plan to provide value to you and your loved ones is not in place until the documents are properly executed. The sad reality is that stuff happens. You can not plan when you will need an estate plan.

I was reminded of this in March when my mom passed away quite unexpectedly. She had been in the process of updating her estate plan but was in no rush to do so since she was just in her early 70’s and healthy. Not only am I, her only child, an estate planning attorney but she, herself, was a retired estate planning attorney. We thus both know you can not delay.  Stuff happens!

My rule of thumb for people who are having trouble finishing their estate plan is to remind you that a plan which is 95% right is probably better than not having a signed estate plan at all. We can work toward 100% right after that but you need to get something in place when you can!  To quote a friend of mine, “done is generally better than perfect.”

Should you want to get your estate plan done contact us to make an appointment. We have a team of experienced estate planning attorneys ready to help. In fact, we have three attorneys who are Certified Specialists in Estate Planning, Trust and Probate law.  We can assist clients throughout California.

As 2016 comes to an end I wish you a happy new year and my best wishes for a great 2017!

-John

P.S. Here’s a link to a page on our website with some estate planning articles.

How to probate when a husband and wife die a year a part

I had a really interesting fact pattern today that I wanted to share. I got the perspective client’s permission to share but, of course, names are changed for privacy. Sadly Gina’s mom, Molly, died in December of 2015 and her dad, Donald, died in December of 2016. A crappy 12 months for Gina we can all agree. They owned a house in Sacramento county.

A very common scenario we see is where the decedent’s home ends up in one spouse’s name alone. This is often done for financing purposes where one spouse has great credit, one spouse has bad credit, one spouse is employed, one spouse is self employed, etc…. Several of those factors were present here. So there is a house in Molly’s name as her “sole and separate property.” That is, Donald actually deeded his interest in the house to Molly as her sole and separate property.

Our goal is to get the house into Gina’s name in the most efficient and cost effective manner possible. Oh ya, I forgot to mention, Gina is an only child.  For simple math let’s say the house is worth $500k with a $250k mortgage.  Let’s assume no other assets of significance to keep this simple.  Gina has options. Let’s discuss them.

OPTION A:

Gina could treat the house as her mom’s separate property. That is what the deed says so that is a very reasonable approach. By doing that there would be a probate for a $500,000 house. At the conclusion of probate, due to the laws of intestacy, Gina would get 1/2 of the property and the other 1/2 would go to dad’s estate. The cost would be roughly $13,000 in attorney fees and roughly $2,000 in court costs for a total of $15,000.

That’s not all though. Then dad’s 1/2 has to be probated.  Let’s assume $250k value so about $8,000 in attorney fees and just under $2,000 in court costs.

Yikes up to $25,000 in probate fees and costs… but that’s not all.  Let’s assume the house appreciated $50,000 from Molly’s death until Donald’s death. Based on the Sacramento real estate market in recent years that is a reasonable guess. That would slightly reduce the cost of the probate by $1,000 (that is the cost of probating a $450,000 house rather than a $500,000 house) but still all in at $24,000.

However, that’s not all… bigger still is 1/2 of that $50,000 gain would not step-up in basis at Donald’s death thus leaving Gina with a tax basis in 1/2 of the property $25,000 less than current value. If we assume 25% between federal and state capital gains tax that’s about $5,000 or $6,000 more.

In summation I think option A would cost Gina about $30,000.

OPTION B:

My preferred plan is option B. Let me explain.  Yes, the deed says “sole and separate property” but does it always mean that?  We have, many times, successfully used a spousal property petition even when the title says that it is separate property. Again, remember, this deed is only in Molly’s name alone due to financing reasons. The reality is it was community property.  Title is just a presumption and that presumption would be easily knocked down.

So we would prepare a spousal property petition (SPP) to transfer the property, 100%, from mom to dad.  Different attorneys charge different amounts for preparing an SPP but let’s just call it $5,000 between attorney fees and court costs as an estimate.

The SPP would move the property 100% to dad’s estate.  We would then probate dad’s $500,000 house. The cost would be about $15,000 for that probate

The total of attorney fees and court costs with option B is thus $20,000.

PLUS Gina gets a FULL STEP UP IN TAX BASIS so will not have a gain on sale and thus avoids about $5,000 or $6,000 in capital gains tax. Gina is the big winner here!

There are always other facts to consider. In this case I asked about creditors and confirmed that Donald was not on Medi-Cal. That is, I don’t want to create a large estate for dad and then have dad’s estate go to creditors.

Please remember that each case can have other unique factors so talk to an attorney before trying this on your own.

-John

 

The California probate process speech

I feel thankful that NBI and other organizations consistently ask me to come talk about estate and probate law.  Yesterday I had the pleasure of speaking for almost two hours on probate law to a group of attorneys and paralegals. My topic outline is below. I get a real charge out of talking to a group and sharing my knowledge. Should your organization need a speaker please do not hesitate to reach out to us!  -John

 

I. HOW TO FILE AN ESTATE IN PROBATE COURT
9:00 – 9:50, John B. Palley
A. Distinctions Between the Modest and Larger Estate
B. The Estate Timetable and What Needs to Be Done
C. Steps for Proving the Will
D. Steps for Challenging the Will
E. How to Prepare and File the Inventory
II. WORKING WITH EXECUTORS AND ADMINISTRATORS
9:50 – 10:40, John B. Palley
A. Duties of Executors or Administrators During the Probate Process
B. Paralegal Contact With Executors or Administrators
C. How Misconduct and/or Removal of Executors or Administrators is Handled
D. Compensation
E. Special Administration
F. Duties of the Attorney for the Executor – Who is the Client?

Probate book for your KINDLE – download it now!

As my avid readers know I was excited to release a book about the California probate process a couple months back. In all honesty sales have been better than expected. It took a while to get the Kindle format working but it should be up and running now. Go to Amazon and check it out.

Probate Book Cover

Here is the table of contents which gives you an idea of the topics covered:

Table Of Contents

Author Introduction. 3

Experience of Meissner, Joseph & Palley Law Firm
In Probate. 3

Types Of Probate. 3

Common Issues Faced By Practitioners In
Probate Process. 3

Is Probate Necessary?. 3

The People Involved In The Probate Process. 3

Timeline For The Probate Process. 3

Common Issues In The Probate Process. 3

Technical Terms Used In The Probate Process. 3

Common Terms Used In Probate. 3

Basic Facts About The Probate Process. 3

Letters In Probate And Filing Claims. 3

Probate, Taxes And W-9 Forms. 3

Selling Probate Property And Assets. 3

The Final Petition In The Probate Process. 3

The Role Of An Attorney In The Probate Process. 3

Costs In Probate Cases. 3

 

Here is the terminology list from the book as a sneak peek:

Terminology

  • Administrator – Person named to administer the probate if not named in will
  • Court Reporter – The person who types notes of what is said in Court and does not exist in all probate court rooms
  • Decedent – The person who died
  • Executor – Person named to administer the probate in the will
  • File Examiner – Is typically an attorney, but sometimes a non-attorney, who works at the court and advises the Judge on each case
  • Judge – The probate Judge is a Superior Court Judge who is in charge of the process
  • Lawyer – Typically the Personal Representative is represented by their own legal counsel
  • Personal Representative – Includes Executor, Administrator and Special Administrator
  • Probate Referee – State appointed official who appraises probate assets
  • Special Administrator – Person named to act on behalf of the estate on an emergency or temporary basis

 

 

Ratings and Reviews