Category Archives: Small Estate

Small Estates Law in California

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In 2012, the law in the state of California changed regarding small estates. Currently, California Probate Code §13100-§13116, the Small Estates Law, says that if the value of the decedent’s estate at the time of death is less than $150,000.00, the estate does not have to go through probate. An affidavit is signed which is then used to distribute the estate to the rightful heirs. The affidavit has to be signed at least 40 days after the death of the decedent. If the estate is administered under the typical probate provisions, there are no documents needed for filing with the Superior Court.

The $150,000.00 limit on the value of the estate includes the following assets: Brokerage accounts, mutual funds, bank accounts, stocks, bonds, and real property not to exceed a value of $50,000. Other assets similar to the ones previously listed are also included in the $150,000.00 fair market value of the estate. The assets have to be owned by the decedent and titled in his or her name. However, the following assets are NOT included in the determination of the estate’s value:

  1. Property (real or personal) held in joint tenancy.
  2. Assets that are held in trust.
  3. Pension accounts, including IRAs and 401(k)s.
  4. Life insurance benefits.
  5. Death benefits.
  6. Vehicles registered in the decedent’s name.
  7. Pay from military service.
  8. Up to $15,000.00 in salary not paid prior to the decedent.
  9. Pay on death (POD) accounts.
  10. Accounts that name a third party beneficiary.

The value of the estate is determined as of the date of the decedent’s death. The day that the affidavit is signed is irrelevant.

The small estates law only kicks in after the affidavit has been signed. The affidavit cannot be signed before a 40-day time period has elapsed since the decedent’s death. All affidavits signed after January 1, 2012 trigger the $150,000.00 limit for the small estates law. The key here is the day that the affidavit was signed, and not the date that the decedent died.

One question that many people have regarding the California small estates law is: “How are the estate’s assets collected?” The required affidavit has to include all of the information in California Probate Code § 13101. After the affidavit is signed, it is given to the person or financial institution that is holding the estate’s assets. The assets are then transferred into the custody of the one who signed the affidavit. After the creditors are paid, the remainder of the estate is distributed to the heirs.

Deciding whether to go the Small Estates route or whether to endure probate can be a difficult decision and one that should be made by consulting someone with knowledge of the subject. California estate-planning attorney John Palley at Meissner, Joseph & Palley, Inc., is a Certified Specialist in Estate Planning, Trust, and Probate Law. His office will be happy to assist you with any of your estate planning needs. Call today at 1-888-920-5983.

 

Know thy probate options

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I met with a new client today whose husband died recently. She said she went to a local attorney, who was very nice, and told her she would have to do a full probate to get the house out of her husband’s name and into her name.  The grieving widow, luckily, decided to do a little more research before hiring that attorney.

The problem is that this attorney didn’t know all the options or… worse.  Let’s just assume he didn’t know all the options. The problem is a lot of attorneys say they are “probate attorneys” because they have done a probate before. This does not make one a true probate attorney.  Doing one or two or even 20 probates does not make one an expert.

If you are looking to hire an attorney find someone that:

1) is a CERTIFIED SPECIALIST IN ESTATE PLANNING TRUST AND PROBATE LAW;

2) only knows about probate, trust and estate law on their website;

3) has been practicing for many years.

If you find anybody else you are shortchanging yourself.

In this case the client came to me and suggested that from her research a spousal property petition might be a more efficient way to go. In fact, normally that’s our go-to petition when one spouse dies. However, in this case they had a short term marriage and thus the house being in the deceased husband’s name (alone) will make a spousal property petition, or SPP, very difficult.

She told me the house was probably worth about $190,000.   I asked if there was any chance it would appraise for $150,000. She said YES!  So we are going to try to get it appraised for under $150,000 so that we can file a petition to determine succession to real property worth less than $150,000. In this case the decedent’s only child is in full agreement and thus the under $150k probate should work.

The options such as an SPP or an under $150k probate pay the attorney less than a full probate.  Sadly there are starving attorneys out there who make recommendations with their pocket book in mind before your well being.  Make sure you work with a California probate attorney who cares about his clients and wants to do the best thing for THE CLIENT!

I hope to work with you!  -John

Payment Options For Small Estate Probate Cases

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In a full, or normal, California probate case the attorney fees are set by statute. It’s set in stone what one will pay and, absent extraordinary circumstances, the fee can not be more than that.  Also, the attorney fee should not be paid before the Court order.  Money for costs most certainly can be requested up front by the attorney but not the attorney fees.

What about a small estate? That is a petition to transfer real estate worth less than $150,000. What then?  All attorneys do this differently.  We try to be as flexible as possible.   Most clients who hire us to pursue a small estate want to hire us on a FLAT FEE BASIS.  That is, they want to know up front exactly what it’s going to cost them. They want certainty.  This makes sense.

Thus, for a typical small estate probate we will offer a FLAT FEE which INCLUDES all the Court costs.  You write a check, we deposit it in our law firm’s attorney-client trust account, we do the work, and then we remove the money from our trust account. That’s how the majority of our small estate clients pay.  Flat fee and up front.

However, not everybody has money sitting in the bank to hire a good attorney to complete their small estate.  We know this, we understand this and we want to help you!  We thus, in some cases, will offer you the ability to pay a flat fee at the close of escrow. That is, we will front the Court costs, file all the documents, and then get paid after the house sells… or at some other future date.

Contact John Palley, our lead probate attorney, to discuss these options for your case.

Flat Fee Probate Court Attorneys

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Ethics are important to us and thus our hourly fee time is carefully noted in our time keeper program. However, some clients just do not like hourly fee arrangements. They want to know exactly how much they are going to spend.  We have heard the request many times and now we can offer FLAT FEE PAYMENT OPTIONS in most California probate Court matters.

Flat fee payment options are available for most all probate court work including:

- Under $150,000 probates

- Spousal property petitions

- Trust petitions

- Heggstad petitions

- and the list goes on.

If you have the need to file in a California probate court and want a FLAT FEE that you know about BEFORE the work starts let us know!

 

Options with $140,000 in assets

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“My mom died with $140,000 in assets so I want to do a small estate.”

“I want to avoid a full probate because I have heard how horrible it can be.”

“What do we have to do to qualify to be a small estate?”

“Do we have to do a small estate if we have less than $150,000 in assets?”

These are some of the many common statements I hear regarding the California probate process.  The state legislature’s recent change in the probate limits from $100,000 to $150,000 has given clients greater to ability to qualify as a small estate.  However, just because it’s cheaper and takes less time does not mean it’s better for everybody.

The fact is that a small estate only clears title to assets. A small estate, or “succession,” does not deal with creditors, liabilities and taxes among other things.

A full probate is different in that it deals with clearing title to assets AND clearing up liability, creditor and tax issues.

In short with a full probate you can stand in the decedent’s shoes to transact business on his or her behalf.  With a mini probate you are only getting a Court order dealing with specific assets you tell the Court about.

A mini probate is not right for all cases!

Look beyond the attorney fees, Court costs and time involved.  Make sure your attorney tells you all the details that make one better or worse than the other for YOU!

Each case is UNIQUE!

Let’s talk about your estate!

-John

Clearing Title To Timeshares

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I am contacted frequently by people who need to clear title to a timeshare after death. Typically the timeshare is in mom and/or dad’s name but mom and dad are now deceased. The timeshares are often with Marriott, Wyndham, Starwood, and many other such timeshare companies. They are in often in places like San Diego, Lake Tahoe and Newport Beach. That is, California timeshares!

I offer a special service to clients when a timeshare is the only asset that needs to be cleared after death. That is, when everything else is properly in a trust typically. I will prepare and take care of the small estate paperwork to clear title via California Probate Code 13200.  With the new law the timeshare can be worth up to $50,000!

Also, if mom and/or dad are still alive let’s get the timeshare put into a living trust NOW to avoid the hassle after death.

Failure to have a title in a trust can create a lot of problems after death. In fact, in some cases the timeshare is just a liability after death. However, failure to clear title can create an on-going liability for a deceased person’s estate.

The key is plan ahead for your timeshare and all other assets!

Contact me with questions.  -John

Avoiding Probate in California

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I hear people all the time talking about avoiding probate and avoiding attorney fees.  Let’s be clear probate is no walk in the park. However, it’s not the end of the world.  Additionally, I understand people do not want to pay an attorney unnecessary amounts of money.  The problem is a lot of people are so focused on avoiding probate and avoiding attorney fees that they just create more problems after their death. Let’s go through some of the big ones.

First and foremost people create taxes for their loved ones.  They avoid probate AND avoid attorney fees by creating a “joint tenancy” deed and all they do is create a capital gains tax for their loved ones when their loved ones go to sell the house. Is that really what they meant to do?  Maybe a trust would have been $1,500 but the capital gains tax could be tens of thousands of dollars.  Thus a lot of people are better off, and leaving their loved ones better off, by creating a trust which will avoid probate AND avoid capital gains tax!

Paperwork, paperwork, paperwork.  I have a case right now where a young man died without a will or trust.  He had about $75,000 in assets spread out all over the place.  Among the issues we have had to clean up for him: 2 automobiles that needed to have title cleared through the California DMV transfer without probate forms, a last paycheck, a 401k that had no named beneficiary, an IRA with no named beneficiary, 3 or 4 small bank accounts, and an assortment of personal property that needed to be divided up. Luckily his surviving family, a loving brother and sister, are very nice and are not fighting.

People die out of order.  There are two things you can count on in life right?  Death and taxes as they say!  However, you can NOT predict the order of death!  I have had several cases where people created joint tenancies, or even gave assets outright to their adult child, and then that seemingly healthy adult child died… before mom or dad.  Then the parent was doing a probate for their child. Don’t let that happen to you.

I could go on but the point is review your proposed estate plan with a qualified California estate and probate attorney. Let them tell you if your plan is as good as you think it is.

-John

Small Estate Hypothetical

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With the updated California probate code 13100 a person can now pass up to $150,000 after death without entering into a full probate.  Today’s blog post is a hypothetical case to give you an example of how this code section works and what may be the benefits between a full probate and a small estate.

Let’s say you have assets of $120,000 at death and are debating between clearing title by full probate or utilizing the small estate measures of probate code 13100, et seq.  Let’s say there are bank, or financial accounts (including life insurance), at 6 different institutions.  Let’s say there is a car.  Let’s say there is a will.  Let’s say there is a named executor in the will and 5 beneficiaries named in the will.  Let’s say the decedent owned no real estate at death.

A full probate would cost you about $4,600 in attorney fees and $1,500 in Court costs.  Avoiding a full probate should mean avoiding all the Court costs so that $1,500 is saved. Attorney fees will vary but let’s say $2,000 as an estimate for a competent California probate attorney to handle this.  At first blush it must be better to avoid probate, right!?  Nobody wants to go through probate, right!?  It’s always better to not pay an attorney if you can help it, right!?  Well, MAYBE. Let’s explore….

If we avoid a formal probate (let’s call that a “mini” probate) we would do California small estate affidavits and other documents as necessary. Some financial institutions require affidavits of domicile to be signed by everybody receiving assets.  Some assets, like life insurance or annuities, may require completing beneficiary claim forms.  Items like cars and mobile homes usually have forms through the regulatory agency to complete.  In California all of this can be done 40 days after death.  All the people entitled to received assets would need to sign the documents. Then the attorney would send the small estate affidavits in to try and get the money distributed. Based on past experience out of 6 financial institutions odds are that two will require an affidavit of domicile to be signed and notarized. In some cases we just do that form ahead of time to head that requirement off. Others may have their own form they want completed which they will mail to the attorney’s office typically.

All told, at a reasonable hourly rate, you might expect to spend about $2,000 in attorney fees. In addition there will be several hundred in notary fees to get all the small estate affidavits and other documents notarized by all the beneficiaries.

If all goes according to plan all the monies should be received within 4-6 weeks after submitting the forms to the financial institutions.  Again, that can not be started until 40 days after death.  Thus, with any luck you are totally done within 3 months of death.

However, what if you are owed money?  That is, what if the decedent owed you money or you paid for the funeral?  Or what if you paid some of the decedent’s bills after death? You are entitled to reimbursement in a normal probate but this is a mini probate which has no structure and no supervision. In that case the other beneficiaries will need to agree to give you money to reimburse you.

What if the decedent had creditors? That becomes more complicated. Pursuant to the California probate code you are liable for the decedent’s debts and expenses up to the extent you receive assets. So you could end up being proportionally liable for debts and expenses if you are an easier target than the other beneficiaries.

Also, you are not entitled to an Executor’s fee when doing  a mini probate even though you will spend a lot of time on the case.  As with other claims it could be that the other people inheriting will choose to pay you an Executor’s fee but that’s between you and them!

Ok, ok, what if you go for it and do the dreaded… full probate!?  Again, at first blush people say avoiding probate is always best. Avoiding attorney fees is always best. Avoiding Court costs is always best. However, it truly is not always best.

When there is real estate to sell a full probate is generally better as then you have a centralized person to sell the real estate without needing the consent of others. In this hypothetical case there is no real estate so that’s not an issue. However, it can be simpler in a full probate. Let me explain why.

In a full probate you will get “Letters Testamentary” issued to you.  Most every financial institution knows what they are, will honor them, and will distribute the asset to the estate. Once at the estate level you, as the Executor, will have control.  When doing mini probates all small estate affidavits are different and with the recent change in California law, from $100,000 to $150,000, there could be even more confusion possible.  However, Letters are Letters and they are honored everywhere!  Thus, a full probate will likely make it easier to gain control of all assets.

Reimbursing you for funeral, cremation, expenses you paid and the Executor’s fee happens at the estate level. It’s very clear cut. There is a procedure in place, forms to fill out, and the money is reimbursed.  In particular that Executor’s fee, in a small probate like this, would be $4,600. That’s $4,600 you likely wouldn’t get in the mini probate so it’s a nice benefit for you.

Dealing with creditors can be easier at the probate level.  If you do a mini probate all you can really do is tell a creditor there is no probate.  Some creditors will accept this answer and go away. Others will push the issue and may even try to open probate to get paid the money they are owed. With a full probate there are standard forms to fill out to put creditors on notice, for creditors to file claims, for claims to be accepted or rejected, and are dealt with in the probate.  Again, as above, these claims would be paid off the top with all beneficiaries sharing equally.  There is much more finality here as the creditors claim period will expire and be done when the probate ends.  With the mini probate there is potential for liability up to one year after death and maybe even longer in some limited cases.

A full probate code take 7 months and does cost more money. However, it is a more concrete process and offers more finality than a mini probate does.

If you want to run the numbers for you mini probate let me know and we can talk about it.

Go to ‘Who needs a Full Probate” to know more about Probate Code 13100. To contact the Probate Attorney, click here

-John

 

Small Probates

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Don’t forget the threshold for small probates is now up to $150,000 rather than $100,000 in California. This means you can pass up to $150,000 without probate in California.  However, remember that assets are based on GROSS VALUE not net value.  Also, remember that just because one avoids formal probate does not mean one avoids all headaches so talk to an experienced California estate planning and probate attorney regarding all your planning and probate options!

Happy New Year!

California Probate Code 13600 – REVISED LAW

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This is the last law update for the week. This covers the last law changed by AB 1305.  California probate code 13600 deals with last salary of a decedent (including vacation pay). It should be paid to the surviving spouse without the surviving spouse having to go to probate Court to get Letters of Administration or Letters Testamentary.  The amount has been changed from $5,000 to $15,000 with AB 1305. The new law goes into effect on January 1, 2012. 

I hope you find this helpful.

-John

 

13600.  (a) At any time after a husband or wife dies, the surviving
spouse or the guardian or conservator of the estate of the surviving
spouse may, without procuring letters of administration or awaiting
probate of the will, collect salary or other compensation owed by an
employer for personal services of the deceased spouse, including
compensation for unused vacation, not in excess of five thousand
dollars ($5,000) net.
   (b) Not more than five thousand dollars ($5,000) net in the
aggregate may be collected by or for the surviving spouse under this
chapter from all of the employers of the decedent.
   (c) For the purposes of this chapter, a guardian or conservator of
the estate of the surviving spouse may act on behalf of the
surviving spouse without authorization or approval of the court in
which the guardianship or conservatorship proceeding is pending.
   (d) The five thousand dollar ($5,000) net limitation set forth in
subdivisions (a) and (b) does not apply to the surviving spouse or
the guardian or conservator of the estate of the surviving spouse of
a firefighter or peace officer described in subdivision (a) of
Section 22820 of the Government Code.
   (e) On January 1, 2003, and on January 1 of each year thereafter,
the maximum net amount of salary or compensation payable under
subdivisions (a) and (b) to the surviving spouse or the guardian or
conservator of the estate of the surviving spouse may be adjusted to
reflect any increase in the cost of living occurring after January 1
of the immediately preceding year. The United States city average of
the “Consumer Price Index for all Urban Consumers,” as published by
the United States Bureau of Labor Statistics, shall be used as the
basis for determining the changes in the cost of living. The
cost-of-living increase shall equal or exceed 1 percent before any
adjustment is made. The net amount payable may not be decreased as a
result of the cost-of-living adjustment.

13601.  (a) To collect salary or other compensation under this
chapter, an affidavit or a declaration under penalty of perjury under
the laws of this state shall be furnished to the employer of the
deceased spouse stating all of the following:
   (1) The name of the decedent.
   (2) The date and place of the decedent’s death.
   (3) Either of the following, as appropriate:
   (A) “The affiant or declarant is the surviving spouse of the
decedent.”
   (B) “The affiant or declarant is the guardian or conservator of
the estate of the surviving spouse of the decedent.”
   (4) “The surviving spouse of the decedent is entitled to the
earnings of the decedent under the decedent’s will or by intestate
succession and no one else has a superior right to the earnings.”
   (5) “No proceeding is now being or has been conducted in
California for administration of the decedent’s estate.”
   (6) “Sections 13600 to 13605, inclusive, of the California Probate
Code require that the earnings of the decedent, including
compensation for unused vacation, not in excess of five thousand
dollars ($5,000) net, be paid promptly to the affiant or declarant.”
   (7) “Neither the surviving spouse, nor anyone acting on behalf of
the surviving spouse, has a pending request to collect compensation
owed by another employer for personal services of the decedent under
Sections 13600 to 13605, inclusive, of the California Probate Code.”
   (8) “Neither the surviving spouse, nor anyone acting on behalf of
the surviving spouse, has collected any compensation owed by an
employer for personal services of the decedent under Sections 13600
to 13605, inclusive, of the California Probate Code except the sum of
____ dollars ($____) which was collected from ____.”
   (9) “The affiant or declarant requests that he or she be paid the
salary or other compensation owed by you for personal services of the
decedent, including compensation for unused vacation, not to exceed
five thousand dollars ($5,000) net, less the amount of ____ dollars
($____) which was previously collected.”
   (10) “The affiant or declarant affirms or declares under penalty
of perjury under the laws of the State of California that the
foregoing is true and correct.”
   (b) Reasonable proof of the identity of the surviving spouse shall
be provided to the employer. If a guardian or conservator is acting
for the surviving spouse, reasonable proof of the identity of the
guardian or conservator shall also be provided to the employer. Proof
of identity that is sufficient under Section 13104 is sufficient
proof of identity for the purposes of this subdivision.
   (c) If a person presenting the affidavit or declaration is a
person claiming to be the guardian or conservator of the estate of
the surviving spouse, the employer shall be provided with reasonable
proof, satisfactory to the employer, of the appointment of the person
to act as guardian or conservator of the estate of the surviving
spouse.

13602.  If the requirements of Section 13600 are satisfied, the
employer to whom the affidavit or declaration is presented shall
promptly pay the earnings of the decedent, including compensation for
unused vacation, not in excess of five thousand dollars ($5,000)
net, to the person presenting the affidavit or declaration.

13603.  If the requirements of Section 13601 are satisfied, receipt
by the employer of the affidavit or declaration constitutes
sufficient acquittance for the compensation paid pursuant to this
chapter and discharges the employer from any further liability with
respect to the compensation paid. The employer may rely in good faith
on the statements in the affidavit or declaration and has no duty to
inquire into the truth of any statement in the affidavit or
declaration.

13604.  (a) If the employer refuses to pay as required by this
chapter, the surviving spouse may recover the amount the surviving
spouse is entitled to receive under this chapter in an action brought
for that purpose against the employer.
   (b) If an action is brought against the employer under this
section, the court shall award reasonable attorney’s fees to the
surviving spouse if the court finds that the employer acted
unreasonably in refusing to pay as required by this chapter.

13605.  (a) Nothing in this chapter limits the rights of the heirs
or devisees of the deceased spouse. Payment of a decedent’s
compensation pursuant to this chapter does not preclude later
proceedings for administration of the decedent’s estate.
   (b) Any person to whom payment is made under this chapter is
answerable and accountable therefor to the personal representative of
the decedent’s estate and is liable for the amount of the payment to
any other person having a superior right to the payment received. In
addition to any other liability the person has under this section, a
person who fraudulently secures a payment under this chapter is
liable to a person having a superior right to the payment for three
times the amount of the payment.

13606.  The procedure provided in this chapter is in addition to,
and not in lieu of, any other method of collecting compensation owed
to a decedent.