Small Estate in CA and Probate

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lostinjersey
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Small Estate in CA and Probate

Post by lostinjersey »

Curious about CA law and small estates. I have some family members (husband and wife) who are elderly and currently have no will (to my knowledge). Their only assets are personal property and checking and savings accounts. Total net worth is probably less than $300k.

If one was to pass away, it’s my understanding that the surviving spouse would inherit everything. If the second was to then pass, their surviving children would inherit equally.

Is there any compelling reason they should create wills? Should they be concerned about avoiding probate in their situation? Or can they title the bank accounts TOD or name beneficiaries, and avoid probate? Is there a mechanism in CA under which the settling of their eventual estate could be straightforward and inexpensive?

I live in another state but if it’s worth consulting a CA attorney, I will provide them with that recommendation.
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dual
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Re: Small Estate in CA and Probate

Post by dual »

Definitely they should name beneficiaries for all of the their investments, savings and checking accounts.

CA also allows them to change their real estate to Transfer on Death. It costs maybe $50 plus some hassle going to the county offices. This should reduce their estate below the small estate threshold.
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lostinjersey
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Re: Small Estate in CA and Probate

Post by lostinjersey »

Thanks dual. I’ll let them know about the bank accounts.

I realize I was unclear about their other property. They don’t own real estate. In addition to the bank accounts, their only other assets are things like furniture, clothing, appliances, etc. Nothing of any significant value.
Luckywon
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Re: Small Estate in CA and Probate

Post by Luckywon »

Wouldn't it be easier for their heirs if they prepared wills to appoint an administrator to pay burial expenses and file final tax returns for them?

They should also consider executing springing POA's and health care POA's in the event one is deceased and the other incapacitated. Otherwise you may be in probate court applying for conservatorship.
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lostinjersey
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Re: Small Estate in CA and Probate

Post by lostinjersey »

Luckywon wrote: Wed May 27, 2020 12:58 am Wouldn't it be easier for their heirs if they prepared wills to appoint an administrator to pay burial expenses and file final tax returns for them?

They should also consider executing springing POA's and health care POA's in the event one is deceased and the other incapacitated. Otherwise you may be in probate court applying for conservatorship.
Great points. They are agreeable to signing POAs, but I’m not sure what benefit there is to having them also sign wills. Hence my questions.

So what happens if they pass intestate WRT burial expenses and final tax returns? Can one of the children take this on, or does the court have to get involved?

As additional background, I had another close relative die intestate in a different state. His estate closing was extremely straightforward since all his assets were held jointly with his wife. There was no probate, just a single, simple court filing. I’m trying to determine if something like this is possible in CA. I know these relatives will not want to spend thousands of dollars on wills if everything will eventually pass to their kids without them doing anything further.
bayview
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Re: Small Estate in CA and Probate

Post by bayview »

lostinjersey wrote: Wed May 27, 2020 1:11 am
Luckywon wrote: Wed May 27, 2020 12:58 am Wouldn't it be easier for their heirs if they prepared wills to appoint an administrator to pay burial expenses and file final tax returns for them?

They should also consider executing springing POA's and health care POA's in the event one is deceased and the other incapacitated. Otherwise you may be in probate court applying for conservatorship.
Great points. They are agreeable to signing POAs, but I’m not sure what benefit there is to having them also sign wills. Hence my questions.

So what happens if they pass intestate WRT burial expenses and final tax returns? Can one of the children take this on, or does the court have to get involved?

As additional background, I had another close relative die intestate in a different state. His estate closing was extremely straightforward since all his assets were held jointly with his wife. There was no probate, just a single, simple court filing. I’m trying to determine if something like this is possible in CA. I know these relatives will not want to spend thousands of dollars on wills if everything will eventually pass to their kids without them doing anything further.
This sounds like one of the circumstances in which Nolo or LegalZoom Wills would be appropriate. No lawyers, just witnesses to signing, plus notary if CA requires.
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stan1
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Re: Small Estate in CA and Probate

Post by stan1 »

bayview wrote: Wed May 27, 2020 6:26 am This sounds like one of the circumstances in which Nolo or LegalZoom Wills would be appropriate. No lawyers, just witnesses to signing, plus notary if CA requires.
I'd agree with someone helping them use LegalZoom. Better to have the estate plan with the health care directive, power of attorney, etc. than leave it up to the state. Along with transfer on death and beneficiary designations on the accounts.
senex
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Re: Small Estate in CA and Probate

Post by senex »

lostinjersey wrote: Wed May 27, 2020 1:11 am So what happens if they pass intestate WRT burial expenses and final tax returns? Can one of the children take this on, or does the court have to get involved?
The cheap & easy way to do burial expenses is to have the children pay out of pocket. I've seen it work fine when children are cooperative and each has the money to do so (or are honorable about reimbursing the paying child later). The TOD transfer process is very fast (often 1-2 weeks), and they could probably charge to a credit card and have the savings account inheritance in their hands before the bill arrives.

Final tax return: not sure. You probably (?) can do it without court involvement, given that some states have small-estate procedures that are done via affidavit (no court filings), and that good fraction of estates never go through probate. You could start with IRS Pub 559 ( https://www.irs.gov/forms-pubs/about-publication-559 ) and try to find a similar Franchise Tax Board document for CA.
sailaway
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Re: Small Estate in CA and Probate

Post by sailaway »

In CA, if someone dies intestate , their spouse inherits the communal property, but any separate property that does not have a beneficiary set up is split between the spouse and children.

That might be something to watch for.
nesdog
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Re: Small Estate in CA and Probate

Post by nesdog »

I believe our laws here in California require probate if no will (assuming last survivor) and the estate is valued over $150,000. Fees for this process are set by statute.
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CAsage
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Re: Small Estate in CA and Probate

Post by CAsage »

My mother died in CA and I handled her estate. She had an apartment stuffed with junk (that was THE worst), a checking account TOD to me, and a brokerage account TOD to me and my sibling. Mom had a will, but I never needed it nor did anything with it. I paid all the final bills (monthly CC, closing out utilities etc) and filed her final 1040 without ever going to court to be formally appointed executor. I signed her return "Personal Representative" and it all worked just dandy (no estate return was required because we closed it all out so fast). The real issue with not opening probate formally is whether the heirs are cooperative and will in fact fairly split those final expenses. If you are totally secure on that issue, you don't need probate. Nobody cares about personal property or household goods, and I do not believe probate is required even if the estate was of higher value. TOD and beneficiaries supercede the will.... Not a lawyer, just my experience.
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CAsage
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Re: Small Estate in CA and Probate

Post by CAsage »

lostinjersey wrote: Wed May 27, 2020 12:14 am Is there any compelling reason they should create wills? Should they be concerned about avoiding probate in their situation? Or can they title the bank accounts TOD or name beneficiaries, and avoid probate? Is there a mechanism in CA under which the settling of their eventual estate could be straightforward and inexpensive?
If all their assets are Joint or beneficiary, there will not be a problem with the first to die (it will all go to survivor). Yes, that avoids probate. The real issue might be if one or both of them at some point are less competent? Or don't retitle things properly? Ideally, after the first to die, the survivor would then followup to ensure a named TOD or beneficiary... and if there are multiple heirs or there are any concerns about someone not paying off the bills, or wanting to include grandchildren or split it more complexly, or a chance they won't be able to name all the heirs on the TOD form.. then you need a will. And there are shorter forms for CA "small estate" which I'm not super familiar with.... The probate fees are statutory by law, but the executor can waive his/her fee; a lawyer will not. Note I am only a bystander, not a lawyer. For complex magic spells (wills, trusts) you need to hire the right Wizards!
Salvia Clevelandii "Winifred Gilman" my favorite. YMMV; not a professional advisor.
senex
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Re: Small Estate in CA and Probate

Post by senex »

nesdog wrote: Wed May 27, 2020 5:02 pm I believe our laws here in California require probate if no will (assuming last survivor) and the estate is valued over $150,000. Fees for this process are set by statute.
I believe that dollar limit is for the probate estate, i.e. the stuff that doesn’t transfer directly via TOD, beneficiary, or joint owner. So I think the OP’s situation would not require probate.
RetiredMommy
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Re: Small Estate in CA and Probate

Post by RetiredMommy »

My mom died March 2019 in CA with no will. NIGHTMARE She had an account POD that was pretty easy but we are still dealing with closing her estate even though it was small (under 300k) No fighting as it’s just two children but, well, the court is a nightmare. I had to wait months for the “letters” to give me authority to do anything. Court required a bond (I live out of state) and will for each year this drags on—probably 3. Just over a thousand a year... Everything had to be liquidated and now that it’s all cash in a bank we can file a petition to close... waiting time pre-pandemic in the county she died—7 months! I’m so ready to be done but cannot as this is taking forever. Plus, in addition to the bond, the attorney handling the probate is earning about 9k. I don’t care about the money; I just need to be done at this point but I cannot.

Honestly, get them to take care of this... I bugged my mom forever but she never got around to it. Luckily we didn’t need to get permission from the court to make healthcare decisions as that would have been really bad. I NEVER want to deal with the Ca court system again!
FoolStreet
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Re: Small Estate in CA and Probate

Post by FoolStreet »

RetiredMommy wrote: Thu May 28, 2020 8:31 am My mom died March 2019 in CA with no will. NIGHTMARE She had an account POD that was pretty easy but we are still dealing with closing her estate even though it was small (under 300k) No fighting as it’s just two children but, well, the court is a nightmare. I had to wait months for the “letters” to give me authority to do anything. Court required a bond (I live out of state) and will for each year this drags on—probably 3. Just over a thousand a year... Everything had to be liquidated and now that it’s all cash in a bank we can file a petition to close... waiting time pre-pandemic in the county she died—7 months! I’m so ready to be done but cannot as this is taking forever. Plus, in addition to the bond, the attorney handling the probate is earning about 9k. I don’t care about the money; I just need to be done at this point but I cannot.

Honestly, get them to take care of this... I bugged my mom forever but she never got around to it. Luckily we didn’t need to get permission from the court to make healthcare decisions as that would have been really bad. I NEVER want to deal with the Ca court system again!
Outside of the pod account, what was in the estate?
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Re: Small Estate in CA and Probate

Post by bsteiner »

I usually prefer to have a Will that provides for the children in trust rather than outright, to keep the children's inheritances out of their estates, and to protect their inheritances from their creditors and spouses, and Medicaid.

I also usually prefer not to have named beneficiaries except for life insurance and retirement benefits. That will avoid unintended results, and will avoid the need for the executors to go after non-cooperating beneficiaries for money to pay debts, expenses and taxes.

But here you have the combination of a very small estate and the person being in California where probating a Will and dealing with the court are more difficult than probably anywhere else. So after one spouse dies, if the children get along and you're confident that they'll cooperate in paying any debts, taxes and expenses, and if none of the children is receiving means-tested government benefits, then it would be simpler to name the children as beneficiaries on everything. While both spouses are alive they could hold their assets jointly so they would pass to the surviving spouse.

However, if they're concerned about Medicaid for the surviving spouse, they would need to provide for each other in trust rather than outright. They would need Wills (or a revocable trust since they're in California) to do that.
Last edited by bsteiner on Thu May 28, 2020 11:27 am, edited 1 time in total.
RetiredMommy
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Re: Small Estate in CA and Probate

Post by RetiredMommy »

FoolStreet wrote: Thu May 28, 2020 8:46 am
RetiredMommy wrote: Thu May 28, 2020 8:31 am My mom died March 2019 in CA with no will. NIGHTMARE She had an account POD that was pretty easy but we are still dealing with closing her estate even though it was small (under 300k) No fighting as it’s just two children but, well, the court is a nightmare. I had to wait months for the “letters” to give me authority to do anything. Court required a bond (I live out of state) and will for each year this drags on—probably 3. Just over a thousand a year... Everything had to be liquidated and now that it’s all cash in a bank we can file a petition to close... waiting time pre-pandemic in the county she died—7 months! I’m so ready to be done but cannot as this is taking forever. Plus, in addition to the bond, the attorney handling the probate is earning about 9k. I don’t care about the money; I just need to be done at this point but I cannot.

Honestly, get them to take care of this... I bugged my mom forever but she never got around to it. Luckily we didn’t need to get permission from the court to make healthcare decisions as that would have been really bad. I NEVER want to deal with the Ca court system again!
Outside of the pod account, what was in the estate?
My moms estate--as identified by the Appraisal her estate had to pay for... a condo appraised at 200k (did not sell anywhere close to that), a piece of land valued around 30k, bank account with about 40k, car, and personal property. Not much but it adds up. The main thing is that I never, ever, ever would want someone to knowingly go through probate in CA after how long this has taken us. Our isn't messy or complicated at all but when you involve a probate attorney and the courts you tack on more money being paid to outside parties PLUS the time it takes to be officially done. When trying to move on after the death of a loved one, the fact that you cannot close the estate weighs heavily on you.
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HueyLD
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Re: Small Estate in CA and Probate

Post by HueyLD »

lostinjersey wrote: Wed May 27, 2020 12:14 am Curious about CA law and small estates.
Per https://www.courts.ca.gov/10440.htm?rdeLocaleAttr=en

[click on the + signs to expand]

To use the simplified process for transferring personal property:

First, figure out if the value of all the decedent’s property (the estate) is $166,250 or less. To do this:

Include:

• All real and personal property.
• All life insurance or retirement benefits that will be paid to the estate (but not any insurance or retirement benefits designated to be paid to some other person).

Do not include:

• Cars, boats or mobile homes.
• Real property outside of California.
• Property held in trust, including a living trust.
• Real or personal property that the person who died owned with someone else (joint tenancy).
• Property (community, quasi-community, or separate) that passed directly to the surviving spouse or domestic partner.
• Life insurance, death benefits or other assets not subject to probate that pass directly to the beneficiaries.
• Unpaid salary or other compensation up to $16,625 owed to the person who died.
• The debts or mortgages of the person who died. (You are not allowed to subtract the debts of the person who died.)
• Bank accounts that are owned by multiple persons, including the person who died.

For a complete list, see California Probate Code section 13050 .

If the total value of these assets is $166,250 or less and 40 days have passed since the death, you can transfer personal property by writing an affidavit. There is a special form for this that you can get from most banks and lawyers. Your court’s self-help center may also have this form or a sample you can use to guide you.
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lostinjersey
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Re: Small Estate in CA and Probate

Post by lostinjersey »

bsteiner wrote: Thu May 28, 2020 9:39 am I usually prefer to have a Will that provides for the children in trust rather than outright, to keep the children's inheritances out of their estates, and to protect their inheritances from their creditors and spouses, and Medicaid.

I also usually prefer not to have named beneficiaries except for life insurance and retirement benefits. That will avoid unintended results, and will avoid the need for the executors to go after non-cooperating beneficiaries for money to pay debts, expenses and taxes.

But here you have the combination of a very small estate and the person being in California where probating a Will and dealing with the court are more difficult than probably anywhere else. So after one spouse dies, if the children get along and you're confident that they'll cooperate in paying any debts, taxes and expenses, and if none of the children is receiving means-tested government benefits, then it would be simpler to name the children as beneficiaries on everything. While both spouses are alive they could hold their assets jointly so they would pass to the surviving spouse.

However, if they're concerned about Medicaid for the surviving spouse, they would need to provide for each other in trust rather than outright. They would need Wills (or a revocable trust since they're in California) to do that.
Bsteiner - thank you so much for weighing in. I appreciate you sharing your expertise on my very simple question.

Everything you stated makes sense to me, until the last paragraph. I don’t understand the need for a trust to receive Medicaid. In these folks’ situation, it’s likely one or both will need it for long term care eventually. Wouldn’t they simply spend down their bank balance and then go on Medicaid? Is it not that simple?
Topic Author
lostinjersey
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Re: Small Estate in CA and Probate

Post by lostinjersey »

Appreciate all the replies, especially from folks with first hand experience. This is not easy to navigate and it’s so helpful to hear from those who have gone before. Greatly appreciated.
bsteiner
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Re: Small Estate in CA and Probate

Post by bsteiner »

lostinjersey wrote: Wed Jun 03, 2020 12:31 pm
bsteiner wrote: Thu May 28, 2020 9:39 am ... if they're concerned about Medicaid for the surviving spouse, they would need to provide for each other in trust rather than outright. They would need Wills (or a revocable trust since they're in California) to do that.
Bsteiner - thank you so much for weighing in. I appreciate you sharing your expertise on my very simple question.

Everything you stated makes sense to me, until the last paragraph. I don’t understand the need for a trust to receive Medicaid. In these folks’ situation, it’s likely one or both will need it for long term care eventually. Wouldn’t they simply spend down their bank balance and then go on Medicaid? Is it not that simple?
If they divide their assets and the one who dies first has a Will leaving his/her assets in trust for the other, then the trust will likely be protected against Medicaid if the surviving spouse needs care. IT's up to them to decide whether it's worth the effort given the amount involved.
RetiredMommy
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Re: Small Estate in CA and Probate

Post by RetiredMommy »

Ok i’m coming back to tell you another nightmare with my mom’s CA probate. We filed Final Petition in May. Our hearing date was just set for.... April 2021! So, 11 months after everything was liquidated! When looking to move on it’s hard to do when still dealing with the state of Ca. And to have 200k sitting in a saving account for a year bothers me too.
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