Anderson Estate Law

Small Estate Redefined-Probate Required for Estates Greater Than $150,000 in California

Cale Beck — Thu, 12 Jan 2012 22:47:42 +0000

A fairly noteworthy change was brought to the estate planning landscape this year- the “small estate,” which since January 1, 1997, has been defined as an estate of $100,000 or less, has been redefined as an estate of $150,000 or less. Effective on January 1, 2012, Bill AB 1305, introduced by Assemblywoman Huber, amended certain provisions of the California Probate Code to allow a simplified administration of all estates with real and personal property having a gross value less than $150,000. The bill also authorizes real property with a gross value less than $50,000 to be transferred by an affidavit procedure, which was raised up from the previous level of $20,000, and authorizes a surviving spouse to collect unpaid salary or other compensation of $15,000, which was raised up from the previous level of $5,000.

In a nutshell, California law allows for two different forms of simplified, “small estate” administration. The first is the “affidavit procedure,” which is just what it sounds like – an affidavit, signed under penalty of perjury, signed by the person entitled to succeed to the property, authorizing the property to be released to them. If the gross value of all real and personal property in an estate is less than $150,000, then this procedure may be used to collect money due the decedent (bank accounts, certificates of deposit, etc.), tangible personal property of the decedent, and any other debt, obligation, interest, right or security of the decedent. If the gross value of all real and personal property of an estate is less than $150,000, an affidavit can also be used to transfer real property with a gross value of $50,000 or less. Finally, the affidavit can be used by a surviving spouse to collect a deceased spouse’s unpaid salary or other compensation of up to $15,000.

The other form of small estate administration is the Petition to Determine Succession to Property. This is applicable when there is real property in an estate exceeding $50,000. It allows a person to petition the court for an order distributing the property to the person or persons entitled to it without having to go through a full probate proceeding. It is a petition to the court which is set for hearing and requires proper notice and therefore may take a few months to complete, but it is much simpler and much less expensive than a full probate administration.

If you own any real estate in San Diego County it may seem that this provision holds no bearing for you. The gross value of your home alone is probably enough to force your estate into a full probate proceeding. However, not all property will be considered a part of your estate at your death. The following types of property are not included in your estate:

All property held in joint tenancy or as community property at your death;
All assets held in a revocable living trust;
All “multi-party” accounts, primarily referring to accounts that the decedent owned but are payable to a third party on the decedent’s death;
Vehicles and boats registered with the DMV;
Manufactured homes, mobile homes, commercial coaches, truck campers and floating homes registered with the DMV or HCD, as appropriate. However, if you own the land and/or the property is affixed to the land, usually indicated by an assessor’s parcel number and property taxes payable the county, then this is real property and is a part of our estate. Remember that probate avoidance is a central estate planning goal for most people. I would encourage you to look at your estate and categorize your property to see where you stand.

Remember that if joint tenancy or community property assets end up transferring to you on the death of the other joint tenant or spouse, then that asset will be owned entirely by you and will be considered a part of your estate at your death. If you have a trust in place, make sure that the title to the asset reflects the trust as the owner. The goal is to have the assets that included in your estate be $150,000 or less. If your estate is still greater than $150,000, or if you are unsure and would like to discuss it with someone, I would encourage you to make an appointment to sit down with us as soon as possible to see what options are available for you.

Who Still Needs an A/B Trust Anyway? P.3

admin — Tue, 28 Jun 2011 22:01:58 +0000

Creditor Protection.
One thing that the standard revocable living trust does not offer is protection from a Settlor’s creditors. During the lifetime of a married couple, or in the event that the surviving spouse retains complete control over the entire estate after the death of the first spouse, the power to amend and revoke the trust and to withdraw the income and principal of the trust at any time for any purpose remains with the couple or surviving spouse. This allows creditors the ability to attach claims to the Trust Estate and demand immediate payment. A Decedent’s Trust, on the other hand, limits distribution to the health, education, maintenance and support needs of a beneficiary and states that these distributions are to be made in the discretion of the Trustee. These restrictions, while sometimes a nuisance, do offer the benefit of protection from creditors, at least while the assets are held in the trust. Since the trust irrevocably holds the funds, and the Trustee is given complete discretion to withhold funds, a creditor cannot attach a claim for immediate reimbursement to these assets. If a surviving spouse or child gets into credit difficulty, the creditor cannot demand immediate payment. A creditor can obtain a money judgment payable once the money is actually distributed, but only above what is necessary for the education and support of the beneficiary. Further, if a beneficiary gets into financial trouble prior to the death of the Settlor, the beneficiary can disclaim his or her interest, allowing the funds to pass directly to the residual beneficiaries without being subject to any claims by a creditor.

Who Still Needs an A/B Trust Anyway? P.2

admin — Tue, 14 Jun 2011 17:21:18 +0000

Blended Families.
As the divorce rate continues to rise in this country, so too does the incidence of remarriage. While these second and third marriages can bless our clients with comfort and happiness in their later years, many of our clients worry that if they die before their new spouse their entire estate will transfer to their new spouse and our client’s children will be put at risk of being left nothing in favor of the new spouse’s family. If this is a concern of yours, then one way to ensure that your children are provided for is the A/B Trust. If you die before your spouse, your separate property and your one-half (1/2) share of the community property of the Trust Estate is set aside in an irrevocable trust, typically called the “B Trust” or “Decedent’s Trust”. By properly drafting the language governing the administration and distribution of the Decedent’s Trust you can direct how much of the Decedent’s Trust remains accessible by your surviving spouse for his or her needs, and can direct when and how the remaining Decedent’s Trust assets will be distributed to your children.

Who Still Needs An A/B Trust Anyway?

admin — Tue, 31 May 2011 17:03:10 +0000

Unmarried and Same-Sex Couples. While the portability provisions of the new tax law allow a surviving spouse to use a deceased spouse’s unused estate tax exemption amount, the same federal rules do not apply to unmarried and same-sex couples, regardless of that couples status under state laws granting spousal rights in the event of common law marriage, same-sex marriage or domestic partnership. If you fall into one of these categories and leaving everything to your partner would elevate the value of your partner’s estate above the estate tax exclusion amount, which is currently $5 million, an A/B Trust is a viable way to make sure that your own estate tax exclusion amount is captured while still allowing your partner access to the funds for health, education, maintenance and support.

Key Phrases

admin — Mon, 14 Feb 2011 17:21:40 +0000

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