Duty to Deliver Will

The person who has custody of the Will must produce it within 30 days of learning of the testator’s death. The custodian is liable for all damages that result from failure to deliver the will

To satisfy the duty to deliver the Will the custodian must deliver the will to the clerk of the superior court of the county in which the estate of the decedent may be administered and mail a copy of the will to the executor named in the will.

Procedure is known as “lodging the Will.”

Independent Administration of Estates Act

Independent Administration of Estates Act (the “IAE Act”), Probate Code §§ 10400 et seq.

This act allows for any sale of assets without a court order. Prior to any sale notice to all heirs and all persons named in the Will is required.

A powerful shortcut to expedite probate, save time and avoid court appearances.

Request this authority in the very first petition filed.

Successor Trustee Tip Sheet on How to Administer and Distribute Trust Assets

Legal services at www.IrvineProbateAttorney.com for successor trustees is provided by Mark W. Bidwell to meet their legal obligations. These obligations are; file tax returns, notify beneficiaries, notify the county, pay bills and debts, account and distribute assets of the trust.

Successor Trustees need a bank account to make deposits and pay debts of the estate. Banks will require a Federal Tax Identification Number, also known as Federal Employer Identification Number (FEIN). A tax number can be obtained online at the IRS website.

A tax return from the date of death to the close of the estate is needed for each year the trust has assets. The return is Form 1041 and is filed on the tax number used to open the bank account. In addition to 1041 returns a final return from the beginning-of-the-year to date-of-death is filed on Form 1040 under the decedent’s social security number.

The Successor Trustee is required to notify heirs of the decedent and beneficiaries of the trust in a format and manner proscribed by California law.  Requirements of the notice are in California Probate Code Section 16061.7. The wording and format is very specific. For example the law directs which section has to be in at least 10-point boldface type. This notice also serves to establish a statue of limitations on when the trust can be challenged.

The Successor Trustee is required to notify the death to each County where the decedent owned real property. Notice is sent to the assessor’s office of the County.  The notice is titled “Change in Ownership Statement Death o Real Property Owner.” The form comes with a warning: “Failure to file this statement will result in the assessment o a penalty.”

Unlike the notifications an accounting is not a legal requirement unless a demand is made by a beneficiary of the trust. But good practice is to provide an accounting. An accounting of assets and debts, income received and debts paid provides transparency and minimizes second guessing of the Successor Trustee’s actions.

The final duty of the Successor Trustee is to distribute assets of the trust. Real property requires filing of an affidavit of death of trustee and a quit claim deed with the County Recorder. The affidavit of death puts the County on notice the owner has died and the name of the Successor Trustee who has authority to transfer the property. The Successor Trustee signs a quit claim deed to transfer ownership out of the trust and to the beneficiaries of the trust as directed in the trust document.

Good practice is for the Successor Trustee to obtain an appraisal on the property as of date of death. The basis to the new owner is the fair market value of the real property.  This is a known as a step-up in basis. Capital gains tax is on the difference between sale price and the date of death market value. An appraisal is needed for any IRS audit.

Any real property distribution to a child of the decedent qualifies for Proposition 13 parent-to-child property tax exclusion. A claim for reassessment exclusion must be filed within 3 years of transfer. Good practices suggest not putting this off and submitting it once the quit claim deed has been recorded.

Avoid a Race with Death to the County Recorder’s Office at DeedAndRecord.com

Death bed transfers to sever joint tenancy in real property require strict compliance with California Civil Code Section 683.2(c).  Either before the death of the severing joint tenant, the quit claim deed to severe joint tenancy is recorded in the county where the real property is located; or the quit claim deed to severe joint tenancy is executed and acknowledged before a notary public not earlier than three days before the death of that joint tenant and is recorded in the county where the real property is located not later than seven days after the death of the severing joint tenant.

 A dispute between a former girl friend of the decedent and his new girl friend arose over ownership of a house. Decedent’s quit claim deed to his new girl friend was recorded 59 minutes after his death.  The joint tenancy was not severed because the quitclaim deed in question was executed before the three day grace period and was not timely recorded.  

 The old girl friend was on title as joint tenant. On his death bed her former boy friend wanted his half of the house to go to his new girl friend. He executed a quit claim deed to give away his half of the house to his new girl friend.

 Eight days before his death, the decedent signed a quitclaim deed conveying his interest in the property .He died on March 29, 1995, at 11:55 a.m..  A friend handed the quitclaim deed to the recording clerk at 11:15 a.m. on the date of death. However, a preliminary change of ownership and some additional form were needed. The recording clerk supplied the friend with the additional forms. At 12:54 p.m., the friend handed the quitclaim deed, together with the completed forms and fees to the cashier in the county recorder’s office and the deed was recorded. But the deed was recorded after death and the deed was executed before the three day grace period. The old girl friend was the owner of the entire house. She promptly kicked out the new girl friend.

Post death funding of trust with a “Heggstad Petition” in probate court

In the Estate of Heggstad (1993) 16 Cal.App.4th 943, 20 Cal.Rptr.2d 433, the court determined a written declaration of trust by an owner of real property was sufficient to create a trust. The Heggstad court did not require a separate deed transferring the property to the trust. 

So a trust may be funded after the death of a property owner.

Sometimes this is not as easy as it would appear. For example the San Diego Superior Court requires the following in the petition:

  •  The vesting of each asset at all relevant times;
  •  Evidence that each asset was placed in trust;
  •  Evidence of every transaction affecting title to each asset in question during the relevant time.
  •  Where a transaction takes legal title to an asset out of the trust or occurs when title is not held by the trustee, evidence to overcome the inference that the Trustor intended that the transaction be considered a non-trust transaction

Post death funding of trust with “850 Petition” in probate court

An 850 petition is filed pursuant to California Probate Code Section 850 by the Trustee who has a claim to real or personal property, title to or possession of which is held by another. The “another” is usually a bank or banks with accounts in excess of $150,000. Otherwise a Section 13100 declaration would be more expedient and cheaper.

 Notice

Personal Service is needed on the entity or person having possession of the account.

California Probate Code Section 851 (a)states: “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 [personal service] on all of the following persons where applicable:…(2)Each person claiming an interest in, or having title to or possession of, the property.”

 Service by mail is needed on the beneficiaries of the trust

California Probate Code Section 851 (b)(a) states: “At least 30 days before the time set for the hearing on the petition, the petitioner shall cause notice of hearing to be MAILED to all of the following persons:(1) All trustees (2) All beneficiaries…”

Key Steps for Probate

1. Hearing date of Petition for Probate  

2. Obtain and file original will with County Clerk  

3. Obtain Taxpayer ID number and file SS–4 and form 56  

4. Estate’s fiscal year end date   

5. Preliminary Change of Ownership forms sent to County Assessor  

6. Inventory and Appraisal due date  

7. Last Day of Creditors Claim Period  

8. Federal Estate Tax Return Due Date  

9. Due date on extension of Federal Estate Tax Return  

10. Alternate Valuation Date  

11. Last day to file disclaimers  

12. Due date of decedent’s final personal income tax return  

13. Due date of estate’s income tax returns  

14. Due date of first accounting  

15. Due date of Status Report

Intentional Interference with Expected Inheritance

Summary of Case: Same-sex, California couple are not married or registered as domestic partners. As a result neither partner has intestacy rights to inheritance from the other partner. One partner is dying and wants to prepare a Will to provide for his partner. His sister lies and connives to delay any estate planning by her brother. Her brother dies without a Will. Under intestacy laws sister inherits all of the assets of her brother. Sister files a petition in probate court to transfer all of her brother’s assets to her.

Surviving partner files an objection to Sister’s petition. He is kicked out of probate court because under California law he no right to an inheritance. Surviving partner files a tort action in Civil Court against sister. He is kicked out of Civil Court because he should have filed in probate court. Surviving partner appeals.

The Old Law: Surviving partner is out of luck as he has no inheritance rights. He cannot file in Civil Court because Probate Court has been the forum established to protect decedent’s testamentary intent.

Reassessment of the Old Law by the Court of Appeals: Injured parties must be provided a remedy in Court. The Court of Appeals balanced the competing goals of providing a remedy to injured parties and honoring the strictures of the probate code. In this case the probate code did not provide a remedy and a tort action in civil court was appropriate.

To prevail in the tort of Intentional Interference with Expected Inheritance the plaintiff must prove:

  1. Expectancy of inheritance
  2. Causation by defendant
  3. Defendant had knowledge of plaintiff’s expectancy of inheritance and took deliberate action to interfere with it.
  4. Defendant’s conduct was independently wrong of the interference
  5. Plaintiff was monetarily damaged

Passage of Property to Spouse

When a husband or wife dies leaving property that passes to the surviving spouse, whether by intestate succession [see Prob. Code, § 6401] or by devise, the property ordinarily passes to the survivor without the necessity for administration. [Prob. Code, § 13500]

File Petition in Probate Court and pay filing fees DE221

Notify children and devisees in Will, if any, of petition and hearing

Attend hearing and Prepare Order from Court to transfer Assets to Spouse DE226

Prepare Transfer Deed and File with County Recorder for transfer of real property

Submit order to financial institutions for transfer of personal property

Intestacy, No Surviving Spouse

Real and personal property passing when there is no surviving spouse but issue of decedent is living

To the issue of the decedent, in equal shares as there are living members of the nearest generation of issue then living and deceased members of that generation who leave issue then living those children of the deceased issue to take equally that share their parent would have taken if living.

Real property passing, no surviving spouse or issue and predeceased spouse has died within 15 years

For purposes of distributing real property if the decedent had a predeceased spouse who died not more than 15 years before the decedent and there is no surviving spouse or issue of the decedent, the portion of the decedent’s estate attributable to the decedent’s predeceased spouse passes to predeceased spouses intestate heirs.

Decedent’s personal property, no surviving spouse or issue and real property with predeceased spouse who has died more than 15 years

to the decedent’s parent or parents equally.

If there is no surviving parent, to the issue of the parents

If there is no surviving parent or issue of a parent to grandparents equally

If there is no surviving parents or grandparents to the issue of those grandparents

If there is no surviving parent, grandparent or issue of a grandparent, but the decedent is survived by the issue of a predeceased spouse, to that issue

If there is no surviving issue, parent or issue of a parent, grandparent or issue of a grandparent, or issue of a predeceased spouse, but the decedent is survived by next of kin, to the next of kin in equal degree