Probate and Trust Information
I am a licensed real estate professional that concentrates his business activity in Probate, Trust and Conservator sales. I understand the process of settling an estate through probate, or by way of family trust. I gained this experience through education, training and personal experience.
I have experienced firsthand the stress that the administration of probate and trust estates can cause. I also have experience dealing with those same issues in my capacity as a real estate agent.
Whether your clients are operating under court approval or under independent powers, I am experienced with both processes. I pride myself on being compassionate and professional, so that when you entrust your client’s affairs to me, you can be assured that they will be taken care of in an open and aboveboard manner.
In California, Probate is handled in the California Superior Courts; it is a court procedure that includes transferring a deceased person's assets to the beneficiaries listed in their will, proving the validity of the will; inventorying and appraising the estate property; paying any debts or taxes (including estate taxes); distributing the property as directed by their will or state law if there is no will.
If a loved one passes away, and probate is necessary, the Court will need to appoint someone to manage the estate. "Personal Representative" is the generic legal term used to describe the “Administrator” (if there is no will) or “Executor” (if there is a will) appointed to oversee an estate. The Personal Representative is responsible for administration of the will and for initiating and maintaining communication with beneficiaries of the estate.
The process of probate administration is made substantially easier, and safer, when a California probate lawyer is made part of the process helping to guide your estate through the system. It is good to hire an experienced probate attorney to assist clients with California probate administration and make it as easy as possible to navigate the probate process.
What is Probate?
Probate in California is a court supervised process that is used to wind up a person's legal and financial affairs after death, usually overseen by probate lawyers in California. Probate includes gathering a deceased person's assets, proving the validity of the will; appraising the estate property; paying creditors (including estate taxes); and then distributing the property as directed by will or state law if there is no will.
California probate is the process of determining the rights and obligations of a person’s legal and financial matters after their death. Probate is the way to transfer assets, resolve debts and clear title so the decedent’s assets can get to the rightful heirs. Often, it is a complicated and time-consuming process. For estates larger than $100,000, court supervision is helpful, in order to oversee the process and approve the distributions.
How is a Probate Started in California?
Although any beneficiary or creditor can initiate probate, normally the person named in the will as the Executor starts the process by filing the original will with the court and filing a Petition with the probate court. If there is no will, typically a close relative of the decedent who expects to inherit from the estate will file the Petition.
How is the Executor Chosen?
If the decedent had a will, the person named in the will as the Executor will serve, if eligible. If that person is unable or unwilling to serve as Executor, or if there is no Will, then any interested family member or person can petition the Court to be the administrator of the Estate.
How does the Executor Get Paid?
California law provides that the Executor gets paid according to a compensation schedule, based on a percentage of the assets of the probate estate.
Could I Be Held Personally Liable For Making a Mistake as an Executor?
Being an Executor is a big responsibility. California’s probate code contains pages upon pages of complex legal rules and procedures that an Executor must follow during the probate. Also, there are certain deadlines that an Executor must meet in filing papers with the Court.
If an Executor violates any of these rules, they can be held personally liable for losses to the estate.
What Assets are Subject to Probate?
Assets owned solely in the name of the deceased person are subject to probate. Assets that pass by means of title, such as real estate titled as “Joint Tenants with Right of Survivorship,” or bank accounts titled as “Transfer On Death” are not subject to the probate process. Assets that pass by means of a beneficiary designation, such as life insurance or some retirement accounts, are also not subject to probate.
In some situations, however, assets that would otherwise pass by title or beneficiary designation can be subject to the probate process.
How is Distribution of the Estate Handled if there is no Will?
If there is no will or trust, the estate will be distributed according to California probate and intestate laws, which state that a person’s estate will be distributed in the following order:
3. Parents (if you have no children)
4. Siblings (if you have no children or parents)
Does Probate Avoid Estate Taxes?
No. Estate taxes, sometimes referred to as “the death tax” or “the inheritance tax,” need to be paid unless advanced tax planning has been done. The executor of the estate is responsible for making sure all estate taxes are paid. For 2009, estates valued at $3.5 million or less are not subject to estate tax. For 2010, there is currently no estate tax; for 2011, estates valued in excess of $1 are subject to estate tax.
Who is Responsible for Paying Estate Taxes?
Under the Internal Revenue Code, the estate tax is collected from the estate of the deceased. Depending on the terms of the will, the estate tax may be paid from the probate estate only, or also from a living trust, life insurance proceeds, and other assets passing directly to beneficiaries outside the probate estate.
If there is a Will, is there still a Probate?
Many people mistakenly think that by having a will they are avoiding probate. However, just the opposite is true. A will guarantees probate because the purpose of probate is to prove the validity of a will.
How big does your Estate have to be to Require Probate?
Estates that have a gross value of over $100,000 of personal property (cash, stocks, and tangible personal items) normally require probate. However, any estate that includes real property worth more than $20,000 requires probate. These values do not take into account any debts that are owed on the property. There are some ways to avoid probate, including beneficiary designations, jointly held assets, and community property.
Is there a Probate for Small Estates, Less than the Minimum Amounts?
California has a “Small Estate Summary Procedure” which allows a shorter and faster transfer of a decedent’s assets without the time and expense of a formal Probate proceeding. Typically, only estates less than $100,000 can utilize the Small Estate procedure.
What is a Probate Asset?
Assets held in the decedent’s name only are typically assets that will have to go through a probate. Assets that transfer by beneficiary-designation, such as life insurance, annuities, 401ks, and IRAs do not go through the probate, so long as the beneficiary is still alive. There are special provisions for a surviving spouse to avoid formal probate if the spouses held title as community property.
Does a Will Avoid Probate?
No. In fact, having a will guarantees there will be a probate. A will must be probated.
How does Jointly Owned Property fit into Probate?
Jointly owned property is also referred to as joint tenancy. Joint tenancy includes a “right of survivorship”, which means when one of the owners dies, the remaining owner automatically becomes the sole owner of the property. Probate is not required in this case. If by chance the death of both owners occur simultaneously, then probate is required.
How long does Probate take?
The length of time of a probate will depend on several factors. It usually takes a minimum of 12 months and can take up to two years or even longer for complex cases.
How much does Probate Cost?
Probate legal fees are set by state law (California Probate Code Section 10800) and are determined based on the size of the probate estate as follows:
• 4% of the first $100,000
• 3% of the next $100,000
• 2% of the next $800,000
• 1% of the next $9,000,000
• ½% of the next $15,000,000
• For all amounts above $25,000,000, a reasonable amount to be determined by the Court
The Personal Representative (i.e. Executor or Administrator) is also entitled to the statutory fee for their services.
The California Probate court can order additional fees for more complicated cases or extraordinary services. There are also court costs and filing fees, document certification and recording fees, and property appraisal fees.
What is the Value of the Estate?
A probate referee does a valuation of the estate to determine the date of death value of the real and personal property assets. The fair market value does not include mortgages or debts against the property. For example, a $500,000 home with a mortgage of $499,000 is still valued at $500,000 for purposes of the probate attorney and executor fees.
What Court Costs will there be?
In addition to the statutory fees for attorneys, there are costs for appraisal fees, publication costs, court filing fees, and miscellaneous fees charged by the county. A typical estate may incur $1,000 to $3,000 in court costs and other mandated fees.
Is Probate Public?
Yes, anyone can go to the courthouse and review your will and the entire court file. This court file becomes a public record when it is filed with the California Probate Court, including the value of the assets and estate inventory. This includes an itemized list of assets, liabilities, income and expenses of the estate, as well as the names and addresses of the estate beneficiaries.
Are there any Advantages to going through a California Probate?
There aren't many, but here are a few:
(1) California Probate proceedings are controlled by a judge, who can resolve disputes between heirs;
(2) There is a process for creditors to submit their claims, which must be made within a four-month period, provided they have received proper notice of the probate; if they do not file within the specified time-period, their claim is barred forever. After probate, the beneficiaries can have peace of mind knowing the assets they received are free from any future claims or actions.
(3) The probate executor is typically required to submit an accounting and report of their activities to ensure California probate duties are being carried out.
(4) In probate, all costs and fees are paid after death out of the estate before anything is transferred to the heirs.
Alternatives to Probate in California
In California, there are alternatives to the full, formal probate. Some of these are:
• If the surviving spouse or registered domestic partner is the sole heir to all or part of the decedent’s estate, they may file a special petition to avoid a formal probate. This method is faster and less expensive than a formal probate.
• If the total gross value of a deceased person’s personal property does not exceed $100,000, an affidavit procedure may be used on behalf of the beneficiaries to avoid a “full” probate.
• If the gross value of a decedent’s real property does not exceed $20,000, an affidavit procedure can be used on behalf of the beneficiaries to avoid a “full” probate.
Six reasons you should consider a trust - How trusts can help you control your assets and build a legacy.
If you haven’t stopped to consider how a trust may help you pass on your legacy, you could be making a critical estate planning mistake. For individuals with substantial assets, I believe protecting wealth for future generations should be top of mind.
There are many types of trusts available, each designed to help achieve specific goals. A financial adviser can help you determine which type (or types) of trust is most appropriate for you. First, though, consider the estate planning goals that a trust may help you realize.
The estate planning benefits of a trust
An effective trust begins with documentation carefully drafted by a qualified attorney with knowledge of your specific situation. Without the appropriate documentation, you and your beneficiaries may not reap the benefits of a trust, described below.
1. Pass wealth efficiently and privately to your heirs. Perhaps the most powerful and straightforward way to use a trust is to ensure that your heirs have timely access to your wealth. When you transfer your assets to your beneficiaries through a will, your estate is settled through probate in the state courts. However, probate is a public legal process that can create several problems for your heirs, including:
· Delays: The probate process can take a year or more, during which time assets may not be easily accessible to pay for funeral arrangements and other expenses.
· Costs: Probate can cost up to 5% of the estate’s value, depending on the state you live in.
· Publicity: When your will is admitted to probate, it becomes a public record and your assets become known to the public. Such transparency can create unwanted scrutiny. It may make your beneficiaries a target for unwanted solicitation, either by individuals or by companies that may be looking to provide a cash advance on an inheritance in exchange for an egregiously high interest rate.
In addition, an unoccupied residence listed as an asset of probate may become an easy target for vandals.
You can avoid probate and gain greater control over how your estate is settled by establishing and funding a revocable trust during your lifetime. Because the trust is revocable, it can be altered or amended during your lifetime. After your death, the trust acts as a will substitute and enables the trustee to privately and quickly settle your estate without going through the probate process. You also can give the trustee the power to take immediate control of your assets in the event that you become incapacitated, a provision that can save your heirs the trouble and time of going to court for a conservatorship. Finally, revocable trusts are dissolvable, meaning you can pull your assets out or change the terms of the trust at any point during your lifetime.
2. Preserve assets for heirs and favorite charities. If you have substantial assets, then you may want to consider creating and funding an irrevocable trust during your lifetime. Because the trust is irrevocable, you cannot amend the trust once it has been established. You would gift assets into the trust and the trustee would administer the trust for the trust beneficiaries based on the terms you determine. Significantly, while the value of the gift could use some or all of your lifetime gift tax exemption, any growth on these assets will not be subject to federal estate taxes at the grantor’s death. The individual lifetime federal gift tax exemption is set at $5.25 million in 2013.
Irrevocable trusts also can serve several specialized functions, including:
· Holding life insurance proceeds outside your estate. The death benefit from a life insurance policy ordinarily would be considered part of your estate—but not if the policy is purchased by an independent trustee and held in an irrevocable life insurance trust that is created and funded during your lifetime. Despite not being subject to estate taxes at your death, the life insurance proceeds received by your irrevocable life insurance trust can nevertheless be made available to pay any estate taxes due by having the insurance trust make loans to, or purchase assets from, your estate. Such loans or purchases can provide needed liquidity to your estate without either increasing your estate tax liability or changing the ultimate disposition of your assets, so long as the life insurance trust benefits the same beneficiaries as your estate does. In particular, this means that illiquid or tax-inefficient assets, such as real estate or taxable retirement accounts, may not have to be sold or distributed quickly to meet the tax obligation.
· Ensuring protection from creditors, including a divorcing spouse. An irrevocable trust, whether created during your lifetime or at your death, can include language that protects the trust’s assets from creditors of, or a legal judgment against, a trust beneficiary. In particular, assets that remain in a properly established irrevocable trust are generally not considered marital property. As such, they generally won’t be subject to division in a divorce settlement if one of the trust’s beneficiaries gets divorced. However, a divorce court judge may consider the beneficiary's interest in the trust when making decisions as to what is an equitable division of the marital property that is subject to the court's jurisdiction.
Keep in mind, though, that irrevocable trusts are permanent. The trust dictates how the funds are distributed, so you want to fund this type of trust only with assets that you are certain you want to pass to the trust beneficiaries, as specified by the terms of the trust.
3. Reduce estate taxes for married couples. For a married couple, it may make sense to use a revocable trust to take full advantage of both spouses’ federal and/or state estate tax exemptions. Upon the death of the first spouse, the assets in a revocable trust can be used to fund a family trust—also known as a credit shelter or B trust—up to the amount of that spouse’s federal or state estate tax exemption. These assets held in the family trust can then grow free from further estate taxation at the death of the surviving spouse. Meanwhile, the balance of the assets in the revocable trust can be transferred into a marital trust for the benefit of the surviving spouse or transferred outright to the surviving spouse, thereby avoiding estate taxes at the death of the first spouse on these assets as well.
The estate tax—free growth potential for funds in a family trust can be significant. Say, for instance, that you and your spouse live in Florida, which has no state estate tax, and have a net worth of $12 million. If one of you dies in 2013, that spouse’s revocable trust can fund the family trust with $5.25 million without paying any federal estate tax. Over the next 20 years, this $5.25 million could grow to $17 million or more, based on a 6% growth rate, compounded monthly, all of which would remain outside the surviving spouse’s taxable estate. While the balance of the assets can be transferred into a marital trust or outright to your surviving spouse, these assets are included in the surviving spouse’s estate and are subject to estate taxation at the surviving spouse’s death.
4. Gain control over distribution of your assets. A properly drafted trust enables you to structure the way your assets are distributed to multiple beneficiaries through succeeding generations. These provisions can give you a great deal of comfort knowing that your wishes will be carried out after your death.
Some common provisions include:
· Distributions for specific purposes. For example, you can stipulate that a trust will make money available to your children or grandchildren only for college tuition or perhaps for future health care expenses.
· Age-based terminations, which stipulate that the trust’s assets be distributed to your children at periodic intervals—for example, 30% when they turn 40, 30% when they turn 50, and so on.
If you want to make gifts to charity, you may also want to consider establishing a charitable remainder trust during your lifetime, which allows you, and possibly your spouse and children, to receive an annual payment from the trust during your lifetime, with the balance transferring to the charity when the trust terminates. You may also receive an income tax charitable deduction based on the charity’s remainder interest when you contribute property to the charitable remainder trust.
5. Ensure that your retirement assets are distributed as you’ve planned. You may be concerned that a beneficiary will liquidate a retirement account and incur a large income-tax obligation in that year as a result. But if you name a properly created trust as the beneficiary of a retirement account at your death, the trustee can limit withdrawals to the retirement account’s minimum required distributions (MRDs), based on the life expectancy of the oldest named beneficiary in the trust document. The trustee can then make distributions to the beneficiaries according to your wishes, whether this might be to retain and reinvest the MRD in the trust or to distribute the MRD to the beneficiaries.
6. Keep assets in your family. You may be concerned that if your surviving spouse remarries, your assets could end up benefiting his or her new family rather than your own. A qualified terminable interest property (QTIP) trust provision can, in this case, be used to provide for your surviving spouse while also ensuring that the remainder of the trust’s assets are transferred to the beneficiaries you’ve chosen.
Building your legacy
The purpose of establishing a trust is to ultimately help you better realize a vision for your estate and, in turn, your legacy. Therefore, it’s important to let your goals for your estate guide your discussion with your attorney and financial adviser about the kind of trust and provisions that are right for you. It is vitally important that the trust be properly drafted and funded, so that you and your beneficiaries can reap the benefits you intend.
Name the Right Trustee
Selecting the right trustee can give you peace of mind that your vision for your estate will be realized. While you may choose to serve as trustee or co-trustee of your revocable trust, it may not make sense for you to serve as trustee or co-trustee of other trusts that you are considering.
You also must determine who will serve when you are no longer willing or able. You might be tempted to choose a friend or relative as trustee, based on the idea that this individual knows the beneficiaries and is best equipped to make distributions accordingly. However, in even the most loving families, relationships can sometimes become difficult and emotionally charged.
While your intentions and directions may be clear, it can be difficult for a trustee who is a friend or relative to act objectively. Moreover, the trustee must be investment savvy, someone who can effectively invest the trust assets in a manner best suited to benefit the trust's beneficiaries. Finally, the trustee is also responsible for preparing accountings and tax filings and keeping up with complex and ever-changing laws regarding trust administration.
An independent trustee with professional experience on both fronts, investment management and trust administration, may turn out to be the best choice. Or, perhaps having co-trustees, one independent and one related, could be the right answer for you. Be sure to discuss potential candidates, and the pros and cons of each, with your attorney or financial adviser.
Warren Nass - Your Certified Probate Specialist (714) 606-0329
Services I Offer:
1. I will help stage the property and have a professional photographer take photos
2. FREE Market valuation Letters (for tax purposes or otherwise)
3. FREE Professional Market Analysis Reports (by mail, fax or e-mail)
4. Preliminary Title Reports and Property Searches (to quickly find deeds of trust and liens)
5. Internet marketing (virtual tours, extensive website exposure)
6. Customized Innovative Marketing Plan
7. Coordinate re-keying of property or re-key myself
8. Coordinate cleaning out and cleaning up property
9. Supervision and organizing of cleaners, haulers, painters, carpet installers and estate liquidators
10. Organize shipping of personal items
11. Continued marketing and showings until court date to increase the chance of an overbid in court
12. Court appearances with attorneys
13. Knowledgeable and experienced with occupied properties
14. Free Notary service for all of my clients. Will travel to you
15. Coordination of all details of transaction, from start to finish