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How to Hold Title to Real Estate

I have been asked the questions many times how should people hold title to real estate in California. Let’s talk about the options.

First and foremost, for anybody that owns real estate in California, the best method is in a California revocable living trust. The other options, below, are a distant second place.  Why is that?  The main reason is that trust ownership avoids probate after death and it also avoids the need for a conservatorship if incapacity happens during life. It’s really that simple.  Probate and conservatorships are extremely expensive and should pretty much always be avoided.  So owning a property in a revocable living trust is the best.

However, owning property in a trust is not the only method and there is one primary reason everybody does not have one… they are expensive to set up.  You can easily spend $2,500 to have an experienced estate planning attorney prepare a living trust package. That’s a lot of money to just about any of us. Plus there is some work involved to get your assets into a trust.  So, let’s say you don’t have a trust… then how should you title your California real estate?

I stress California because other states might have other options. For example “tenancy by the entirety” is something that exists in other states but not in California.  TBE may be a great option… if it was legal in California. So that’s a non-starter.

The most common debate in California real estate is if a husband and wife should own property as “joint tenancy,” as “tenants in common,” or as “community property with the right of survivorship.”  Which is best for you?  Of course, each case is unique and you should talk to your own attorney to get legal advice.

JOINT TENANCY:  JT is really the granddaddy of real estate ownership. It’s probably the most common way to own property in California. Joint tenancies have to be equal (i.e. 50/50 or 1/3 to each of three people or whatever is equal for the number of owners) and automatically transfers to the surviving joint tenant (or tenants) upon death.  Joint tenancies tend to be a good option but not always the best.  One problem is that the survivor does not get a full step-up in basis, at the first death, as they would with a trust or with CPWROS (discussed below).  Also, JT is not good if you do not want the property to transfer to the other tenant or tenants.

TENANTS IN COMMON:  TIC is commonly for non-married people or any co-owners that want full control for their portion of the real estate. If a deed does not specify otherwise it defaults to TIC in California.  TICs also can be used for advanced estate planning purposes by use of a tenancy in common agreement but that is an issue for another day.  A TIC is a good option when you do not want the property to transfer to the survivor upon death.

COMMUNITY PROPERTY WITH RIGHT OF SURVIVORSHIP:  CPWROS is probably the best option for married couples to own property (other than a trust).  This would be for long term marriages or for any marriage for both spouses want the surviving spouse to have their interest in the property.  It’s similar to a joint tenancy, in that the property transfers automatically upon death, but the surviving spouse gets a full step up in basis for tax purposes which can be a huge deal in more valuable properties.  CPWROS has only been around in California for about 15 years.

COMMUNITY PROPERTY: Before California had CPWROS they had CP (without WROS).  CP is good in that it gives the surviving owner a full step up for tax purposes but the property does not automatically transfer upon death. Instead the surviving spouse has to go to probate court and do a spousal property petition. This is costly and time consuming.  There are many old deeds that have CP ownership so check your deed as, in my opinion, this can be the worst way to own property.

Other options to own property include limited liability companies (LLCs) but that’s primarily for investment properties and beyond the scope of today’s post.

Thanks for reading!  -John

 

Homelight.com Website Review

I recently became acquainted with HomeLight.com. This website helps consumers find experienced Realtors to help them with their home sale among other features. It’s a really robust site and I encourage my readers to check it out!

It has extensive information about the probate process and helping you find a probate experienced Realtor. This is a great resource for a person who is selling a house in an area and you haven’t received any referrals. Homelight.com screens the Realtors to find the best of the best and, in particular, those with probate experience.  Here’s the probate page: https://www.homelight.com/probate-real-estate

Another feature I really like is the appraisal estimator. This aggregates multiple sites, like Zillow, to give you a broad range of value. Here’s that feature: https://www.homelight.com/home-value-estimator

Lastly, if you want to sell quick it has a feature where it will present your home to multiple investors who will buy your house quickly and for cash. I am told they will pay 80% or more of fair market value sight unseen. I have not tried this out but it sounds like a great option for some consumers. Here’s the link: https://www.homelight.com/offers

All in all I am very impressed with what I have seen from Homelight.com and look forward to their future offerings as I am sure they will continue to grow and expand!

-John

Where is home for this probate?

I was recently contacted by a potential client who lived in California. They had lost a loved one and wanted to know about probating their loved one’s will. That all sounds simple so far but wait….

Like many their loved one had set up a will and trust in the US and put some, but not all, of their assets into the trust. This is a common problem so please heed this public service message: FUND YOUR TRUST WHILE YOU ARE ALIVE!

Their loved one further complicated the situation by moving to another state in the union and then moving to a foreign country which is where they resided at death.

Can a California probate attorney help?

Wellllllll, it’s complicated.

Maybe.

Two different thoughts came to me:

  1. Full probate, or
  2. Heggstad petition.

The full probate option then begs the question where would they file. Certainly, if they have assets in the foreign country then probating the will there is likely required. From there an authenticated copy of the will and order admitting the will to probate (i.e. accepting it as valid) could be brought back to the US to file. Where in the US?

If there is real property in a state generally an ancillary probate would need to be filed there.  So, if the decedent had a house in South Lake Tahoe then an ancillary probate could be filed in El Dorado county, California.  From my other blog posts you know what ancillary administration is, but in case you forgot, in California ancillary administration is defined as “proceedings in this state for administration of the estate of a nondomiciliary decedent.” (California Probate Code §12501). As you also know from other blog posts, of mine, an ancillary probate is basically the same as a full probate in California. It’s not abbreviated.

However, what if there is a bank or securities account worth more than $150,000? Where then? California is the exclusive jurisdiction for assets that are in California. Where is the bank account? Is it any state the bank has a branch? Is it the state of home office of the bank? Is it the last state the person resided before going abroad. I would say you could make any of these arguments and likely be successful.

This doesn’t say what law will be applied, for example, if a person dies without a will. That’s a discussion for another day.

The key is to find an experienced probate attorney and start there. If California isn’t proper an experienced California probate attorney will tell you that and likely give you a suggestion on what state is proper and may even have an attorney to refer you to!

Oh ya, I wanted to also talk about option 2 which is doing a Heggstad petition. I believe if the trustee resides in California then the principal place of trust administration is California. I would thus say if the facts would work for a Heggstad petition (unfunded trust) then that might be a way to do handle the probate here in California. Again, working with an experienced California probate attorney is key.

Best of luck.

-John

Big delays in California probate courts

Even if you have the best California probate attorney you can get a bad court date. In most cases there are two court dates given. One at the beginning when you file the Petition for Probate or Petition for Letters Testamentary or Petition for Letters of Administration. The second date is at the end of probate when you file your accounting which is often called a First and Final Report.

I always ask the Court to actually follow the law and give my clients a court date within 30 days as provided in California probate code 8003.  That section provides, in part, “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.” However, many courts ignore the law and still file 2 or 3 months out.

So the first court date does at least have a law that the courts are supposed to follow. They may or may not follow it but at least there is hope for a good court date. The final report, as well as any other petitions that may be needed, there is no help in the probate code. So if you file a petition for heirship, a petition to confirm sale of real property, or any other such petition your hearing could be 2, 3 or more months out.

So, back to the final petition. I filed a final petition on 3/20/18 in San Diego county and was given 7/3/18 as my client’s court date. 3 and 1/2 months out! To me this is shocking and unacceptable. Perhaps the legislature can do something!?  The citizens of California, who have lost a loved one, should not have to wait MONTHS to end their probate.

Maybe we need more funding for the Courts!? Maybe we need to improve procedures!?  I don’t know but we need something to help our clients!

-John

Highway robbery and costs of probate publication

I file a lot of probates each year throughout the state of California. Just off the top of my head I think I have open probates right now in Los Angeles, San Francisco, Alameda, San Diego, Riverside, Sacramento, Placer, Orange, El Dorado, Ventura, Sonoma, Fresno, Kern, Amador, San Bernardino, Sutter, San Joaquin, Contra Costa, Butte, San Mateo, Santa Clara, and I am sure I am forgetting a few. In each probate case we have to publish in a newspaper that is adjudicated with the court and covering the place the decedent resided.

In many cities, particularly larger cities, there are several newspapers competing for the business. There might be a “cheapie” at $150 and maybe the local daily Goliath charges $750. In most of those cities we have papers we have found reliable who trend toward the low end if not the cheapest. Having been burned by newspapers who messed up publication we know how important a reliable newspaper is.

However, in some cities, mostly small cities or towns, the costs can be much much much more. I have seen publication costs in the $1,000 range a few times. However, today we got a quote on one that left me practically speechless. Well, I was speechless at first… and now am not as speechless.  This small newspaper replied to us with this email: “Total Due: $1,670.80 (includes affidavit after last pub date = emailed & mailed)”

WHAT? ONE THOUSAND SIX HUNDRED AND SEVENTY DOLLARS AND 80 cents!?  It must have been a typo, right? Even $670.80 would have been pretty unusual but $1,670.80 is by far the most I have ever seen a newspaper charge for publication of notice to petition a decedent’s estate.

They are, of course, the only newspaper adjudicated for that area of the state. They have an old fashioned MONOPOLY on publication in their area. They can charge whatever they want. The residents of the state of California are left to pay this usurious amount. The state of California legislature should really investigate this.

Plus, does anybody still read newsprint? Does it really make sense to continue this centuries old procedure of publishing in ink? Maybe it’s time to go digital!?

Come on California do better!

John Palley to speak at Placer Association of Realtors

PRESS RELEASE – John Palley to speak at PCAR again

Roseville, California.  John Palley will be the main speaker at the Placer County Association of Realtors   Lunch and Learn meeting on March 16, 2018. He will be talking about real estate sales in probate cases. His entire outline is below. Here’s the video for you to check out on YouTube.

 

Placer County Association of Realtors – March 16, 2018

By: John B. Palley, Esq.

I.          Introduction

  1.   John Palley – Meissner, Joseph & Palley
    1. John is 100% probate attorney
    2. Offices in Sacramento, Roseville and Davis
    3. Practice throughout California
    4. John Palley is a Certified Specialist in Estate Planning, Trust and Probate

B.             Real Estate sales in probate cases

II.         How Does a Real Estate sale become a Probate real estate sale?

  1. Most commonly there is no LIVING TRUST involved
  2. In some cases it’s avoided by a deed (joint tenancy or CP with ROS)
  3. Wills – Simple but some type of probate required when there is real estate
  4. Other Estate Planning (LLC’s, FLPs and QPRTs)
  5. Don’t forget title companies make the law but are not perfect

III.       What is Probate

  1. Generally speaking – Probate Court involvement
  2. Different options if assets worth less than $150,000
  3. Formal Probate is a 7 month (or more) process
  4. The probate code (pc) and the Judge create a formal process
  5. The PC lays out strict guidelines for collecting assets & dealing with creditors

IV.       Real Estate sales in Probate Administration

  1.   Million Dollar Question: When can you sell property in probate?
  2.   Listing Agreements – Probate form recommended but not required – 90 day ;o,ot
  3.   Probate Sales Form and Probate Advisory Form
  4.   Short Sales in Probate?  (Protecting other estate assets)
  5.   Key Point in Probate: IAEA v. Non-IAEA (PC 10452 v. PC 10309)
  6.   Selling Upside Down Houses in Probate – PC 10360 et seq.
  7.  Realtor should not be related to PR and not purchase estate property
  8.   Notice of Proposed Action and/or Court Confirmation (waiver is possible)
  9.   Document all marketing and pricing work very carefully
  10.   Commissions – same as any other real estate deal
  11.   Disclosures that are not provided in probate: The Transfer Disclosure Statement, The Seller’s Questionnaire, Earthquake Booklet, Earthquake Questionnaire, signature on the Natural Hazard Disclosure but the report needs to be provided, and Smoke Detector form.
  12.   Disclosure that are required in probate: Lead Based Disclosure, Data Base Disclosure (Megan’s Law), Water Heater Disclosure and strapping, and anything actually known.

VI.   Probate isn’t over yet

  1. Just because the house closes probate isn’t over
  2. Explain the rest of the probate process
  3. Creditors
  4. Taxes
  5. Final accounting

VII.   Probate Listings

  1. Some ideas for helping YOU get more probate listings

VIII.   Conclusion

  1. Working with a qualified probate attorney will make you look good.
  2. Contact me with any questions!

John B. Palley, Esq.

THINGS A PROBATE/TRUST LAWYER LIKES TO SEE IN A

REAL PROPERTY SALE

1)        Market Analysis Report in writing

2)        Probate Listing Agreement

3)        Marketing Plan

4)        Keep detailed log of all marketing and offers

5)        Use of Probate Sales forms

6)        Fax/email agreement once fully signed

7)        Title company information to attorney

8)        At least 20 (or 45 – trust) days for escrow unless discussed beforehand

9)        Final closing statement

10)  Plus, everything you would do for a “regular” client!

Why don’t attorneys return my call?

It has been said to me by many a client, “it is truly a breath of fresh air how fast you reply to emails and phone calls… thank you.” They often then say something like other attorneys don’t even call them back to schedule an initial appointment or call them back once they are the attorney of record… thus the age old question, “why don’t attorneys return my call?”

I hate to make excuses for my brethren so I won’t. Yes attorneys are busy but, you know what, so are most people. Life is busy.  Do attorneys really think they are busier than others?

I have heard attorneys say their time is valuable.  Yes, our time has value but it’s value comes from clients who hire us and happy clients who refer us to their friends and family. If we act like our time is more valuable than others I think we create a chasm between us and our clients. All of us have a similar time on this earth and thus, ultimately, all of our time has a similar ultimate value. You and your time deserve to be treated with respect just like I expect people to respect me and my time. We are all in this together.  Find an attorney who wants to work WITH you!

The bottom line is, however, that attorneys are just not good at creating systems nor are they generally good at prioritizing what’s important. Systems start from the minute you call an organized law office. Your call will be routed directly to me if I am available and if I am not then to my probate paralegal, Danielle.  One of us is usually available. You want answers to your California probate questions and we want to help give you those answers.

From there our systems continue. We know that most people who have lost a loved one want to talk about the probate process as quickly as possible. On the phone or in person you want answers. Once you have the answers, assuming you have to go to probate court, you probably want to file as quickly as possible. You don’t want to wait two weeks for the first appointment and you don’t want the attorney to take a week or two to organize your documents for filing.

REAL WORLD CASE STUDY:

Recently I received an email from a prospective client at 8:40 AM.  The email was from a lead’s consolidator that sends your email to several attorneys in the area. I do not know how many. I emailed back at 8:41 asking the person to call me. We finally spoke on the phone an hour later. They were in my office at 12:15. The courier arrived at 1:15 to take the signed documents to the Placer county probate court for filing. So within 5 hours of initial contact this new client’s probate was on file in court. FIVE HOURS. Not a week. Not a month. FIVE HOURS! Expect that from your probate attorney.

Our systems continue from the time of initial filing.  We publish right away in a newspaper adjudicated for the county that covers the city of death of your loved one.  We then take care of the initial notice of hearing next.  We calendar, in our system, to check the Court’s calendar notes and to get the Court order filed before the hearing. This type of system continues with the whole probate process so that your balls will not be dropped and your case will finish in a timely fashion!  Because at the end what do most people want? They want their probate finished, as quickly as possible, so they can move on with life.

So back to the question of the day… ok, well I don’t have a nice answer and I don’t want to speak ill of my comrades. Another great example was a new client who recently hired me to handle a probate of a loved one who had just died. They had been in touch with the county public guardian’s office. The county office had given them the name of three well respected probate attorneys.  Ok, two others who I consider very well respected and me being the third.  The client was happy I was able to get him in and get the documents ready so quickly to sign.  It had been about 5 days since our first contact as he was dealing with the funeral and other stuff.  You know why he hired me?  He told me, “I had the names of the three attorneys and I called all three… and you were the only one that called me back.”  It had been five days and the other two attorneys still had not called him back or had someone in their office (again, systems) call him back. If you are a young attorney put this down as law firm marketing 101 – call people back.

So it comes down to this, and yes this is a sales pitch… if you want prompt replies and efficient, high quality, legal services for your California probate then call me today!  We handle probates throughout California as we can “appear” telephonically in all the probate courts.

Call or email me today to discuss your case! 888-920-5983.   -John

Heggstad for non-California assets part deux

In homage to the great American movie starring Charlie Sheen and Lloyd Bridges among others, Hot Shots Part Deux, I bring you part deux on Heggstad petitions for non-California assets. This is a question I get asked about it a lot.  Since it was almost 6 years ago that I put up a post on this topic I thought I should update.

I consulted with Joseph J. Powell, the Nevada attorney who I originally worked with on this matter, to confirm some details. Here are his words on the matter:

What the situation was was that the trustee for the Trust, a CA trust, had gotten a Heggstad order issued by the CA court in regard to NV property, located in Las Vegas.  The trustee then acted on that order and had the title changed in NV, through the Clark County recorder’s office, to the Trust, again a CA trust.  I represented a creditor of the estate and moved to have the transfer undone and was successful . . . . . initially.  My end goal was to have the NV property subject to an NV estate matter so that it would be easier access by my creditor client by requiring it to go through the NV estate administration.  Ultimately, I was not successful as the NV probate court did, eventually, allow it to get into the trust and bypass probate.   I will explain what occurred.

Based on my objection, our probate court undid the transfer to the Trust based on the CA Heggstad order, thus putting it back into the Decedent’s name as it was held prior to the Decedent’s death.  The ruling was based on the fact that CA had no jurisdiction over NV property to render the order in the first place.  However, negating that transfer to the Trust just lasted a short time.  The trustee then brought the equivalent of his Heggstad petition here in Nevada, under the NRS (Nevada Revised Statutes) statute which is the functional equivalent, and contains nearly verbatim language of that found in CA Probate Code 850.  Over my objection, the NV petition was granted.  The basis for my argument was the existence of the creditor’s claim having already been filed.  My argument, in its most boiled down form, was that the transfer to the Trust, skipping probate, would be fine when there is not a creditor’s claim pending, but shouldn’t be allowed when there is an existing claim filed against the Estate.  In other words, a Heggstad petition should only be granted in NV when there is not a creditor issue which would then not allow the creditor to make a claim to the property through the Estate proceeding.  The argument was that a creditor should not have to try to collect against a trust asset, which was technically not a trust asset at death.  In other words, a probate avoidance should not be allowed in the case of a pending claim against the person’ estate, as obviously a creditor cannot bring a claim against the Decedent’s Trust, straight out of the box, unless there was some contractual right to do so.  In NV, a trust asset can only be touched, absent a contractual claim, if the Estate is otherwise insolvent, and there are some other hoops to jump through as well.  In any event, my argument lost and the equivalent of the Heggstad petition was granted by our court and thus allowed the NV house to get into the trust, thus skipping probate.   We could have appealed, but the client determined that it was not worth the hassle as there were, at the time, other avenues to seek collection.

The Los Angeles county case was In the Matter of the HARRY ROSS AND ANNA ROSS REVOCABLE TRUST DATED JULY 9, 1987, AS RESTATED ON MAY 10, 1993 AND AMENDED AS TO THE SURVIVOR’S TRUST ONLY ON AUGUST 31, 2000, with the case number being P-12-074607-T. The Clark County, Nevada, case number was GP016315.  It should be pointed out that the attorney in the LA County matter referred to 17200(b) which, as many know, has similarities to California PC 850. That will be a blog post for another day!

I think the most important take-away from this is that Nevada has a law similar to Heggstad so if you have a Nevada asset outside of a trust just file in Nevada. Contact Mr. Powell (702-255-4552), or other experienced Nevada counsel, to work with them on your Nevada/California cross-over cases. I should add that Mr. Powell is licensed in both California and Nevada.

Until next time….

-John

New California Probate Code Section 851

Attention probate attorneys and do-it-yourselfers:
If you are utilizing California probate code 850 to do a Heggstad petition or other utilization of this broad code section be careful on your notice of hearing! As of January 1, 2018 there is a new California probate code section 851. I will paste it below.

I have highlighted in red the key changes. This is important because failure to follow this will most certainly give you a delay of a month, or more, in your hearing!

If you have any specific 850 or 851 questions it’s possible I can help. Let me know.

-John

 

Probate Code
Prob C § 851. (a) At least 30 days prior to the day of the hearing, the petitioner shall cause notice of the hearing and a copy of the petition to be served in the manner provided in Chapter 4 (commencing with Section 413.10) of Title 5 of Part 2 of the Code of Civil Procedure on all of the following persons where applicable:

(1) The personal representative, conservator, guardian, or trustee as appropriate.

(2) Each person claiming an interest in, or having title to or possession of, the property.

(b) Except for those persons given notice pursuant to

subdivision (a), notice of the hearing, together with a copy of the petition, shall be given as provided in Section 1220 if the matter concerns a decedent estate, as provided in Section 1460 if the matter concerns a conservatorship or guardianship, or as provided in Section 17203 if the matter concerns a trust to all of the following persons:

(1) Each person listed in Section 1220 along with any heir or devisee whose interest in the property may be affected by the petition if the matter concerns a decedent estate.

(2) Each person listed in Section 1460 if the matter concerns a conservatorship or guardianship.

(3) Each person listed in Section 17203 if the matter concerns a trust.

(c) A notice of hearing shall contain all of the following:

(1) A description of the subject property sufficient to provide adequate notice to any party who may have an interest in the property. For real property, the notice shall state the street address or, if none, a description of the property’s location and assessor’s parcel number.

(2) If the petition seeks relief pursuant to Section 859, a description of the relief sought sufficient to provide adequate notice to the party against whom that relief is requested.

(3) A statement advising any person interested in the property that he or she may file a response to the petition.

(d) The court may not

shorten the time for giving the notice of hearing under this section. [Amended by Stats. 2017, Ch. 32, Sec. 1. (AB 308) Effective January 1, 2018]

Crazy Court Dates – Courts Must Be Busy

Well the California probate courts must be busy. We just got a crazy court date in a matter in Orange County probate court. That is, we filed a final petition last week to end a probate. So let’s say we e-filed it on January 10th and we got a court date… wait for it… of… MAY 31, 2018. That is 4 and one-half months from now. FOUR AND A HALF MONTHS OUT!? We usually receive court dates about 6 weeks out. To be safe I usually say 6-12 weeks out. So 20 weeks out is CRAZY!

My client and her sister want to move on with life. They want to finish their brother’s probate and put this chapter behind them. Just WOW is all I can say. 20 weeks!

Not much we can do except do everything we can to have everything filed as perfectly as possible every time to avoid a further continuance if possible.

One more reason to get your probate filed quickly is the end is out of our control so let’s start it!

-John

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