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HAROLD S. SMALL

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Probate Estate Administration/
Trust Adminstration

We help clients with their estate planning and the preparation of wills and trusts. We also help clients when a loved one dies. If a loved one owned assets in the form of a trust (funded with their assets), it is likely that no court-managed administration is necessary, although the Successor Trustee will need to administer the trust and make distributions in accordance with its terms. In situations where assets are not held in trust, then a court-managed process known as estate administration or probate administration may be needed.

Each probate estate is unique. The typical steps and actions that occur include the following:

  • Filing of a petition with the probate court (typically in the county in which the decedent resided)
  • Giving notice to heir named in the will and to those entitled by law to notice
  • Petitioning to appoint an Executor (in the case of a Will) or an Administrator for the estate (when there is no will)
  • An inventory and appraisal of the estateby the Executor and/or Administrator
  • Payment of debts of the decedent to rightful creditors
  • Payment of estate adminstration expenses
  • Sale of estate assets
  • Payment of estate and/or inheritance taxes, if applicable
  • Petitioning the court for authorization to close the estate and to make distribution of assets to heirs
  • Paying remaining estate adminstration expenses
  • Final distribution of assets to heirs

SOME FREQUENTLY ASKED QUESTIONS INCLUDE:

Q: What should I do first?

A: Locate the Will and communicate with counsel that can provide you with advice as to how to proceed.

Q: What happens if an objection is made to the will?

A: An objection to the Will may be in the form of a “Will-contest” or a motion/petition asking the court whether a potential objection may be viewed as a contest. A contest may be costly to litigate and the inclusion of a “no-contest” clause in the Will may cause the contesting party to lose all of his/her rights to the estate in the event that they file a contest.

A person must have legal standing in order to file a contest as to the Will. Will contests typically are considered/filed in circumstances where disproportionate shares of the estate assets are distributed to children or when distribution choices/schemes have been modified and estate planning documents executed close in time to a death and these vary significantly from prior documents. Disputes also may arise over distribution of tangible personal property and ARE frequently manifested in the form of contention and/or dissatisfaction as to the choice of who was designated to act as Executor.

Q: Who administers the property of the deceased?

A: A Will designates an Executor(s) and a Trust designates a Trustee(s). If there is no Will, and a probate proceeding is commenced, an Administrator is appointed who acts much like an Executor and has comparable powers. The Executor or Administrator administers property of the Probate Estate and the Trustee administers property held in a Trust. Probate administration or trust administration primarily involves the process through which assets are transferred from the name of the decedent/trust to the names of the beneficiaries. In the case of the trust, this administrative process may include distributions of income in principle over a number of years.

Q: What assets do not go through probate?

A: Non-probate assets do not go through probate. Examples of some of these assets include:

  • Property in which title is held as “joint tenants with right of survivorship.” The property will pass to the surviving joint tenant by operation of law and is not subject to probate administration.
  • Property in which title is held as “community property with right of survivorship.” This is property held with a spouse and title passes to the surviving spouse by operation of law with an abbreviated filing with the court.
  • Retirement accounts (e.g. IRA, 401(k), pension plan and profit sharing plans) where there are designated beneficiaries.
  • Life insurance policies where there are designated beneficiaries.
  • Bank account with “pay on death” (“POD”) designations or where the account is “held in trust for.”
  • Property owned by a living trust. The legal title goes to the Successor Trustee without having to go through probate. However, a title transfer document (such as an Affidavit) may be needed.

Q: Does an Executor/Administrator receive compensation?

A: Executors/Administrators are reimbursed for legitimate out-of-pocket expenses incurred in the management and distribution of the estate. Under California law, statutory fees/commissions are payable to the Executor/Administrator subject to court approval. Extraordinary fees/commissions may also be awarded by the Court. Executors/Administrators need to fulfill his/her fiduciary duties on behalf of the estate. Fulfilling those duties needs to be done with integrity and in accordance with the laws of the state in which the estate is being administered. Executors/Administrators can be held liable for mismanagement of estate assets that are in their care. Executors/Administrators should retain an attorney and an accountant to advise and assist with his/her duties.

Q: How long does probate take and how much does it cost?

A: Probate administration in the simplest situation will range between six (6) and twelve (12) months. Most are settled within nine to eighteen (9 to 18) months. When there is litigation (e.g. a Will contest, litigation relating to rights to the estate, and claims of creditors that are contested) the estate administration process can run much longer. The cost of administration varies substantially depending upon a number of factors including the value and the complexity of the estate. The existence of a Will and the location of assets will affect the cost. California law (and the law of many states) provides that statutory fees are dependent upon the size of the estate. In addition, extraordinary fees may be awarded when services outside of the norm are performed by the Executor/Administrator and/or an Attorney.

 
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