After a person dies, his estate must be administered. This means that some person or entity with authority must take some action to see that the decedent's assets are transferred to the proper beneficiary and that the decedent's debts and post-death claims are addressed and paid, if possible. Certain other obligations must be fulfilled, such as the filing of final income tax returns, if applicable, receiving refunds, and more.
The following list represents the number of different ways an estate can be administered in the State of California. Most states have similar types of procedures. The classic definition of "administration" probably only includes the first three ways listed, but for the purpose of this discussion, a much broader definition of administration is employed.
- Probate. This is probably the most complicated form of administration. It is required in California only if the decedent owned solely in his own name assets valued greater than $100,000. Creditors of the decedent are addressed by formal probate rules, and generally, must make their claims against the estate within four months of the issuing letters to the personal representative at opening of probate, or be barred from suing on their claims. For more information on probate administration, click here.
- Trust Administration of a revocable "Living" Trust. This fact may comes as a surprise to a person who has executed a Living Trust and has sufficiently funded his Trust. This person in learning that his Trust will avoid the necessity of probate administration may have concluded that no post-death administration is necessary. The fact is that most of the post-death actions conducted within the probate scenario must also be executed in the Trust administration context. Often Trust administration is a quicker, more "client-friendly" procedure, and in most cases, is less expensive than probate. Creditors generally are barred from suing the Trust estate, or recipients of the estate, after one year from date of death. California statutes allow the successor Trustee to employ notice procedures substantially identical to probate rules which will invoke a four month limitation period from date of first publication of notice or, if later, 30 days from receiving specific notice of decedent's death. Notice is by newspaper publication and specific notice to known creditors. For more information on Trust administration, click here.
- Spousal Property Petition. In California any assets owned by the decedent that is to go to his spouse by virtue of either his Will or intestate succession may be passed the spouse with a Spousal Property Petition. Both the decedent's separate property and one-half share of his community property may be transferred with this petition procedure. The spouse's ownership share of community property will be confirmed in this petition. This court procedure takes no more than one month. The attorney's fee, unlike probate, is determined on an hourly rate or agreed-upon flat rate, and is much less than a typical probate fee.
- Affidavit of Death of Joint Tenant. An affidavit under penalty of perjury can be executed by the surviving joint tenant or tenants. The affidavit states that the decedent is the same person as the joint tenant mentioned on title to the asset to be transferred. A certified death certificate of the decedent must be attached to the affidavit. By process of subtraction, the remaining joint tenant/s will then own the asset. This procedure has a unique characteristic of barring a decedent joint tenant's creditors to claim or sue against the joint tenancy property or the surviving joint tenant/s.
- Community Property with Right of Survivorship title to real estate. This procedure is newly created by statute in California. It was created to allow the surviving spouse to benefit from the double step-up in income tax basis for appreciated real estate without having to file a Spousal Property Petition. Now, the more simple and less expensive procedure of filing an affidavit can be utilized. No protection against creditors is granted as in the joint tenancy affidavit method.
- Beneficiary claim under POD or ITF designation. Bank accounts are commonly owned with a death beneficiary designation attached to ownership title. The payable on death ("POD") or In Trust For ("ITF") designations are identical. To transfer title to the account into his name, the beneficiary presents a certified death certificate and proof of his identity to the bank. California now allows a mutual fund to employ POD or ITF designations also.
- Beneficiary claim of life insurance, private annuity or IRA or other retirement plan. These assets are contractual in nature. The beneficiary of such asset will take the life insurance proceeds, annuity balance, IRA or other retirement plan according to the death beneficiary designation provided for in the contract entered into by the decedent with the insurance or annuity company or the IRA custodial form or other retirement plan form executed by the decedent. IRA and other retirement plans death designations are affected by Internal Revenue Code regulations and some plans also are affected by the particular retirement plan. Creditors generally have rights against these assets, or the beneficiaries thereof, except that most retirement plans are exempt from creditors claims by California statute. For more information on IRAs and other retirement plans, click here.
- "Small Estates" Declaration. A decedent's personal property can be transferred by declaration or affidavit under penalty of perjury made the person entitled to such property (intestate heir or named in decedent's Will) if the total gross value of such property does not exceed $100,000. Excluded from this gross value are the following: property held in a Living Trust, joint tenancy property, community property, a life estate, property having a POD designation and certain vehicles and other state-registered property such as mobilehomes, floating homes, undocumented vessels, etc. The declarant must wait 40 days after the decedent's death before executing the declaration. To use this declaration, either no probate administration must take place, or the personal representative for a probate must consent to its use. A certified death certificate must be attached to the declaration.
- Summary transfer of real property of "small value" by affidavit. The personal entitled to real estate of low value may transfer title by affidavit under penalty of perjury which is filed with the court, certified by the court clerk, and then recorded in the property county recorder's office. Threshold prerequisites are that the decedent must have owned no more than $20,000 of gross value in California real estate, six months must have passed from decedent's death, all of decedent's debts and estate claims must have been paid, either no probate or personal representative consent, and an inventory and appraisal by a probate referee and a certified death certificate must be attached to the affidavit. All exempt real estate, i.e. joint tenancy property, etc., is excluded from the $20,000 computation.
- Court order determining succession to real property. A petition may be filed with the superior court for transfer of title to real estate if the total gross value of decedent's real and personal property does not exceed $100,000. Again, exempted assets such as life estates, property held in a Living Trust, etc., are not included in the threshold calculation. The petition must be signed by all those who would succeed to the real property by intestate succession or under decedent's Will. 40 days must pass after the death of decedent before the petition can be filed. Notice of the hearing on the petition must be given to all heirs, beneficiaries named in the Will and other interested parties. A copy of the Will must be attached to the petition. An inventory and appraisal of decedent's assets constituting the gross estate must be filed. Either no probate or personal representative consent is required. If the court grants an order approving the petition, such order is then certified by the court clerk and recorded in the county recorder's office.
