Heggstad petition v. full probate after death of first spouse

I spoke to a potential new client recently who has a very common scenario. For this blog we will call them Mr. and Mrs. Smith.  He and his wife have a trust from the early 1980’s.  It appears to be a fairly standard trust. Along with it they also have “pour over” wills as most people have.  Mrs. Smith died recently with an asset out of their trust.

In about the year 2000 they bought a home together in the Sacramento area.  They bought the home “as community property.” That is the deed says “John Smith and Jane Smith, husband and wife as community property.”  Unfortunately the CP with right of survivorship law had not come into effect in that year. Thus California did not yet have an automatic community property ownership option yet.

As a probate attorney when I see husband and wife as community property, but without the words “with right of survivorship” I immediately think of doing a spousal property petition. That is an abbreviated petition in the probate court to transfer the property from one spouse to another.  It is a pretty quick petition and fairly routine when the property is titled in community property. However, a spousal property petition does not work when there is a pour over will. In this case Mr. and Mrs. Smith have the standard pour over will to their trust. Spousal property petitions only work between a husband and a wife; not a trust. So the SPP will not work. What other options does Mr. Smith have?

I believe his only two options are:

  1. A Heggstad petition pursuant to California probate code 850; or
  2. A full probate.

I have blogged other times about the Heggstad petition so I’ll keep it brief here. A Heggstad petition is a way of transferring property to a trust by showing that the decedent intended for the property to be in a trust. With real estate the intent should be shown by a specific writing. The most common writings are: 1) a specific listing of real estate on a schedule of assets, 2) a specific mention of the property in the trust document (i.e. “I give the property located at 1234 Main Street to my son Bob….”), 3) a signed but unrecorded deed, or 4) other written statements such as a letter to an attorney asking for a deed to be prepared. If successful a Heggstad petition should be done in about 8 weeks. The result will be a court order that is recorded in the county recorder’s office.

In this case there is none of the above written intent. I thus think the odds of a Heggstad petition working are probably 50%, at best. In fact, 50% is really the most generous I can be and that’s hoping the Judge is feeling generous. To increase our chances of success I would have Mr. and Mrs. Smith’s children sign consents to the petition and file those with the court.

The other option is a full probate. While the above only supplies about a 50% chance of success a full probate is a 100% chance of success. Unfortunately it costs more money and takes longer. In this case it would probably cost Mr. Smith about double the money that a Heggstad petition would.  Also a full probate is 7 months MINIMUM in time. However, the property can be sold during probate so upon the appointment of Mr. Smith as Executor, in about 6-8 weeks, he can close escrow. That is, 1/2 of the house would be owned by the estate and 1/2 would be owned by him as an individual.

Other options for Mr. Smith to consider?  One option I offered was to file the Heggstad petition and a full probate simultaneously. The advantage is that if the Heggstad petition is not successful the probate is already filed and ready to be approved. The added cost is probably $1,000, or so, for the initial probate costs (filing fee with the court and publication in the newspaper). If the heggstad petition is successful then the full probate would be dropped. On the other hand if the Heggstad is not successful then we move forward with the full probate.

It is unfortunate that Mr. and Mrs. Smith did not deed the property into their trust while Mrs. Smith was still alive.  However, they didn’t so, at this point, it is what it is. We need to clean it up so that Mr. Smith can get the house sold.

If you have a situation, like Mr. Smith, contact us to discuss YOUR best option!   -John

FREE CALIFORNIA PROBATE BOOK

It’s not on Amazon yet, there has been no official press release, but my book HOW TO LIVE AND DIE WITH CALIFORNIA PROBATE (A Layman’s Guide to Understanding Probate in California) has been printed and is in my hot little hands!  If you are in a position of being an administrator or executor of a California probate please contact me for a free copy of this book.  I can mail you a hard copy or email you a PDF.

front

 

Table Of Contents

Author Introduction. 8

Experience of Meissner, Joseph & Palley Law Firm
In Probate. 10

Types Of Probate. 14

Common Issues Faced By Practitioners In
Probate Process. 18

Is Probate Necessary?. 22

The People Involved In The Probate Process. 26

Timeline For The Probate Process. 30

Common Issues In The Probate Process. 34

Technical Terms Used In The Probate Process. 39

Common Terms Used In Probate. 42

Basic Facts About The Probate Process. 46

Letters In Probate And Filing Claims. 50

Probate, Taxes And W-9 Forms. 53

Selling Probate Property And Assets. 57

The Final Petition In The Probate Process. 62

The Role Of An Attorney In The Probate Process. 65

Costs In Probate Cases. 70

Pharmaceutical drug class action lawsuits in PROBATE COURT

We have handled many pharmaceutical drug class action and personal injury lawsuits in probate court.  Recently we have represented many people pursuing settlements in the Actos liver medication lawsuits. We are not the class action or personal injury lawyer. We are the probate attorneys who help when the person who took the medication passed away.  We have significant experience representing individuals in these cases and also have worked closely with the class action lawyers when asked.  If you lost a loved one and are pursuing a pharmaceutical drug class action or personal injury lawsuits, and need probate court help, please contact us.  We can help with probate, conservatorship or guardianship situations.  Likewise, if you are a class action or personal injury lawyer needing help for your California decedents or disabled clients we can help you. We are efficient, friendly and experienced. Contact us today to discuss how we can help YOU!  -John

 

Notifying the California Department of Health Services of a death

How does one go about notifying the California Department of Health Care Services (aka: “Medi-Cal”) of the death of a friend or loved one? You can have an attorney help you or just go to this handy link on their website.

Once there click on NOTICE OF DEATH.

Another screen is brought up where you put in a whole host of information about you, the decedent, their assets, etc….  Just fill it all in, honestly of course, and then wait for Medi-Cal to get back to you.

Don’t forget Medi-Cal generally will take a back seat to other costs of administration in a probate. So a large Medi-Cal bill does not mean you should just walk away from a piece of real estate. We can often get our client’s MONEY IN THEIR POCKET. Medi-Cal just wants the house sold and are ok to get paid after probate. The key is talking to an experienced probate attorney.

If you want to talk about Medi-Cal claims, probate, or any related subjects please contact us.  -John

Special Letters of Administration and Mortgage Companies

“My husband died and the mortgage company won’t talk to me.”

This is becoming a common statement that I hear. Mortgages and the actual deed to real estate are NOT connected. They are separate.  So, for example, if a spouse dies with a house in their name the other spouse can often use a “spousal property petition” to transfer assets to themselves without going through a full probate. However, the mortgage, or encumbrance against the property, does not transfer with the “deed” or title.

What?

Say it isn’t so Mr. California Probate Lawyer!

It’s true.

Plus, mortgage companies are making it more and more difficult to communicate with them after death. Sure I have known of people who have pretended to be the decedent and that can last for years but eventually that will stop working. Plus it’s not legally correct to do that!

I recently encountered an interesting situation. Mom and son were thoughtful enough to prepare a deed, before mom died, to transfer her home to her son.

Now, since you read my blog you know this might have negative tax ramifications after death but, putting that aside, it avoided probate so in general it’s fine. However, the mortgage company really doesn’t care about the deed transfer. They do not care because the deed transfer is completely separate from the underlying mortgage. The client wants to talk to the mortgage company about a loan modification.  The mortgage company won’t talk to him since mom is dead. This is truly a problem.

What can be done?

Rightfully so the client wants to avoid a full probate. I do believe a full probate can be avoided.The answer is Letters of Special Administration.

Letters of Special Administration is basically a limited probate. It’s limited to whatever is specified in the petition. The more limited it is the more likely the court will approve it. We thus may ask for limited powers to communicate with XYZ Mortgage Company regarding loan 1234. Or maybe we will ask for general powers related to real estate.

See California probate code 8544 below:

8544. (a) Except to the extent the order appointing a special
administrator prescribes terms, the special administrator has the
power to do all of the following without further order of the court:
(1) Take possession of all of the real and personal property of
the estate of the decedent and preserve it from damage, waste, and
injury.
(2) Collect all claims, rents, and other income belonging to the
estate.
(3) Commence and maintain or defend suits and other legal
proceedings.
(4) Sell perishable property.
(b) Except to the extent the order prescribes terms, the special
administrator has the power to do all of the following on order of
the court:
(1) Borrow money, or lease, mortgage, or execute a deed of trust
on real property, in the same manner as an administrator.
(2) Pay the interest due or all or any part of an obligation
secured by a mortgage, lien, or deed of trust on property in the
estate, where there is danger that the holder of the security may
enforce or foreclose on the obligation and the property exceeds in
value the amount of the obligation. This power may be ordered only on
petition of the special administrator or any interested person, with
any notice that the court deems proper, and shall remain in effect
until appointment of a successor personal representative. The order
may also direct that interest not yet accrued be paid as it becomes
due, and the order shall remain in effect and cover the future
interest unless and until for good cause set aside or modified by the
court in the same manner as for the original order.
(3) Exercise other powers that are conferred by order of the
court.
(c) Except where the powers, duties, and obligations of a general
personal representative are granted under Section 8545, the special
administrator is not a proper party to an action on a claim against
the decedent.
(d) A special administrator appointed to perform a particular act
has no duty to take any other action to protect the estate.

The highlighted portion above is key as it should allow the Special Administrator to deal with the mortgage company and figure out a plan for the mortgage.

Fees in special administration cases are by agreement of the parties. The typical statutory probate fee schedule does not apply. I generally offer these on a flat fee basis to give the client’s the most certainty and avoid surprises.

I should add that special letters can be used in many other situations such as accessing bank accounts to pay mortgages and funeral expenses, investigate safe deposit boxes, and more. The key is getting the court order so it’s all legal!

-John

Help write the California probate code

People often complain about the California probate code. Now YOU can help fix it! According to this GCN.com article there will be a crowdsourcing feature to modify and amend the code on wiki.  GCN is the only website reporting this at the moment. Read about it here.

Sacramento Probate Court Continuances

I pride myself on rarely having to seek continuances in probate court. That is, I try to be prepared and take care of my business BEFORE the court date so as to avoid continuances. Historically continuances, in Sacramento county, have been 4 weeks out.  I am speaking of the Sacramento probate court when I say Sacramento county. Each county is a little different of course but the trend is being seen in most counties of California as I work throughout the state.

The last year, or so, it’s been moving toward 6-8 weeks at times in Sacramento. Today, I had to ask for a continuance in a case as there are some heirs who want more information. The court date is too close (next week) and thus a continuance was agreed to so we could answer all of their questions. Ok fine but guess what… the case just got delayed THREE MONTHS.

Yes, the next available continuance day after the January 8, 2014 hearing is April 8, 2014. Let me repeat… THREE MONTHS!

As I have stated before if you do a probate case yourself or hire an inexperienced attorney you face an increased risk of a continuance. If a continuance is three months that means your case will be at least 3 months longer than it need be. Plus, it can happen again, and again, and again….  Before you know it your probate case takes a year longer than it should. Forget the rest and hire the best from day one!

Does a legal separation cut off inheritance rights

A prospective client asked me this question the other day and I said I didn’t know the answer off hand. Sort of funny that I didn’t know as I have been doing this since 1994. That is, I have focused my law practice on estate planning, trust and probate law for all these years. During that time I have been asked some pretty arcane questions so you would think a straightforward question would be easier to answer. Not always….

The first question is will or no will!?

That is, if a person has a will and there marriage ends by divorce any provision to the ex-spouse is nullified by the divorce. That is, the ex gets nothing just like most people would want.  See California probate code section 6122 below.  In particular look at section (d). It very clearly indicates that the key is to look at the legal separation paperwork.  See California state form FL-100. This is the petition for dissolution OR legal separation.

Also, look at probate code 78 (pasted below). It defines “surviving spouse” (the key component in many inheritance laws) and clearly does NOT specify legal separation.

I thus conclude a legally separated individual CAN inherit from their “ex” spouse after death!

Good luck to you!  -John

California Probate Code 6122. (a) Unless the will expressly provides otherwise, if after executing a will the testator’s marriage is dissolved or annulled, the dissolution or annulment revokes all of the following:
(1) Any disposition or appointment of property made by the will to
the former spouse.
(2) Any provision of the will conferring a general or special
power of appointment on the former spouse.
(3) Any provision of the will nominating the former spouse as
executor, trustee, conservator, or guardian.
(b) If any disposition or other provision of a will is revoked
solely by this section, it is revived by the testator’s remarriage to
the former spouse.
(c) In case of revocation by dissolution or annulment:
(1) Property prevented from passing to a former spouse because of
the revocation passes as if the former spouse failed to survive the
testator.
(2) Other provisions of the will conferring some power or office
on the former spouse shall be interpreted as if the former spouse
failed to survive the testator.
(d) For purposes of this section, dissolution or annulment means
any dissolution or annulment which would exclude the spouse as a
surviving spouse within the meaning of Section 78. A decree of legal
separation which does not terminate the status of husband and wife is not a dissolution for purposes of this section.
(e) Except as provided in Section 6122.1, no change of
circumstances other than as described in this section revokes a will.
(f) Subdivisions (a) to (d), inclusive, do not apply to any case
where the final judgment of dissolution or annulment of marriage
occurs before January 1, 1985. That case is governed by the law in
effect prior to January 1, 1985.

 

California Probate Code 78. “Surviving spouse” does not include any of the following:
(a) A person whose marriage to the decedent has been dissolved or
annulled, unless, by virtue of a subsequent marriage, the person is
married to the decedent at the time of death.
(b) A person who obtains or consents to a final decree or judgment
of dissolution of marriage from the decedent or a final decree or
judgment of annulment of their marriage, which decree or judgment is
not recognized as valid in this state, unless they (1) subsequently
participate in a marriage ceremony purporting to marry each to the
other or (2) subsequently live together as husband and wife.
(c) A person who, following a decree or judgment of dissolution or
annulment of marriage obtained by the decedent, participates in a
marriage ceremony with a third person.
(d) A person who was a party to a valid proceeding concluded by an
order purporting to terminate all marital property rights.

What can I expect at my upcoming probate Court date?

INTRODUCTION

I get asked this question a lot.  ”What can I expect at my upcoming probate Court date?”  Or, “how soon after my Court date will I have letters testamentary?”  Or even, “do I need to be at my Court date?”

COURT ATTENDANCE

Let me start with the last one… NO. Generally speaking there is no need for you to be at the probate Court hearing. The only exception is if the matter might be contested. In those cases your appearance is a good idea if you are local… or you can “appear” telephonically if you are far away.

IMMEDIATELY AFTER THE HEARING

In some counties they process the court documents right away. In those courts we can get the documents the same day.  Others take a month to process. You just don’t know as each court is different and most courts are not consistent.

FLY ON OUT?

Clients ask if they should fly out right after the Court date to start taking care of business.  Based on the above inconsistency I encourage clients, from out of state, to not fly in until we have the documents in hand.

CONCLUSION

Be alert and aware of your court date but be patient. Unfortunately no matter how prepared your attorney is delays can happen. The chance of delays is reduced when hiring an experienced and organized attorney but things happen!

The King of Intestate Succession Charts

I saw this great piece on the Wall Street Journal’s webpage. It is a chart of succession to the throne. It reminds me of the California laws of intestacy. That is, if someone dies who inherits their stuff. In this Wall Street Journal piece, on wsj.com, it’s who will inherit the THRONE!  Anyway, check it out!