Trust vs. Probate

Estate Administration may involve both Trust and Probate administration

If a loved one has passed away and their property (known as "estate") needs to go through Probate, our Los Angeles legal team at the Law Offices of Maria N. Jonsson, PC stands at the ready to help you navigate this complex court process.

If you are simply considering estate planning (specifically, whether to only set up a Will, or to set up a living Trust), your decisions today may determine whether your Estate will go through Probate upon your death, or not. If you place all your assets into a Living Trust, Probate is generally fully avoided (provided that during your life you transferred your property into your Trust).Conversely - Wills generally go through Probate.

Trust Administration is:

• Much less costly;
• Much faster to complete
• Is a completely private process that stays out of the courtroom, and none of your family affairs or property becomes public record, as it does in Probate.

If you own real property in other States (besides California), a Trust will centralize the administration process and make it simpler and less expensive to administer. Without a Trust, each real property would need to go through Probate in the corresponding County and State where such property is located. This is why it is critical to transfer into your Living Trust any real property that you own anywhere in the United States.

In addition to helping your family avoid Probate, a Living Trust can manage your assets in the event of your illness, disability, or incapacity. Moreover, a Living Trust offers additional protections to its ultimate beneficiaries - from their creditors, from judgments, legal process (such as divorce or bankruptcy) or from themselves (such as - when a beneficiary is afflicted with substance abuse dependence). These asset protections are simply not available in the Probate setting.

To discuss your options with an experienced Trust and Estate attorney when deciding whether you need only a Will or a Living Trust, reach out to our Firm by contacting us online or by calling (424) 383-8445 today.

What is Probate Estate Administration?

Estate administration refers to the legal process around settling someone's affairs after they die. It includes identifying their financial accounts, life insurance policies, real property, personal property, digital assets, business interests, and other property. It also involves settling debts, filing tax returns, notifying Social Security, and distributing their remaining assets. 

A personal representative handles the administration of someone's estate. Where someone has a Will, they nominate an Executor as their personal representative. If someone dies without a will (intestate), a Probate Judge needs to appoint an administrator as their personal representative. If someone leaves a living Trust - the named successor Trustee is in charge of settling the estate.

The Estate Administration Process in California

The following steps are generally practiced in California and across most jurisdictions. 

Arrange the Funeral

The named Agent under an Advance Health Care Directive is usually the person who will instruct regarding burial or cremation, organize a memorial, order death certificates, and make other arrangements accordingly. If no Agent under a Health Directive is appointed, then the Estate Administrator or the Trustee of a living Trust would conduct such tasks.

Appoint a Personal Representative

If someone dies with a Will, their Will must be filed with the Probate Court where the deceased lived. The Will generally names an Executor - the person in charge of settling the affairs. Oftentimes, the named Will Executor must petition the Court to be APPOINTED to serve as Executor (upon issuance of Letters Testamentary).

If there is no Will, eligible heirs (usually spouse, adult children, or parents) must petition the Probate Court to be appointed Estate Administrator, and they become in charge of the Estate upon issuance of Letters of Administration.

Notify the Relevant Parties

The Estate Representative (Executor or Administrator) must publish a Notice of the Estate Administration in a newspaper where the decedent lived, as well as must notify any known creditors and allow them an opportunity to file a Creditor's Claim against the estate. 

Identify the Assets

The Estate Representative (Executor or Administrator), along with a court-appointed Appraiser (aka Probate Referee) must prepare an Inventory of all the deceased's assets and have it filed with the probate court. 

Settle Outstanding Liabilities

The Estate Representative (Executor or Administrator) must pay the deceased's outstanding debts before the court would allow the estate to be distributed to its heirs. These can include but are not limited to:

• Income taxes (state and federal)
• Credit Card Debt
• Personal loans
• Car or other vehicle loans
• Condominium or homeowners association fees
• Phone bills
• Utility bills
• Last illness and Medical Expenses
• Funeral Expenses

File Any Necessary Tax Returns

At the federal level, estates over a certain amount are taxed with the Federal Estate (death) Tax. California does not have State Estate Tax. The personal representative also needs to file the deceased's last Federal and State Income tax returns.

Distribute the Estate

The Estate Representative typically needs to wait until after the claims period has passed for all creditors' claims to be received before they can settled and paid. Only then can the Final Account (or waiver thereof), Report and Petition for Distribution be filed with the Court. This is referred to as the "final petition" and it details all steps taken by the Estate Representative in the administration of the estate, including payment of debts, sale of real property, and any unusual matters that were handled during the administration.

Finalize the Estate

Once the final petition is approved by the court, the personal representative can make distributions according the the Court Order signed by the Probate Judge following the approval of the final petition. After distributions are made, the court requires that Receipts on Distribution be filed with the court evidencing that the assets have indeed been distributed. At such time, the Estate Representative can file a Petition for Final Discharge to be relieved from their duties to the Court. Where the Estate has to maintain a Bond, such bond can only be terminated upon the court's signing the Final Discharge and Order. 

There can be strict timeframes around the estate administration process. You should speak to Probate attorney in California for guidance on the relevant laws and deadlines. 

How to Choose an Executor for Your California Estate 

When nominating an Executor in your Will, there are quite a few factors you may want to consider. Although these factors would depend on your specific circumstances, here are some points to keep in mind:

• REMEMBER THAT IN YOUR WILL YOU ARE ONLY NOMINATING THE EXECUTOR - IT IS THE PROBATE COURT THAT ACTUALLY APPOINTS YOUR EXECUTOR TO SERVE AS SUCH.
• If your will is a Pour Over Will that goes hand in hand with a Living Trust, it makes sense to name the Trustee appointed in the Trust to also serve as Executor of the Will. This is because the job of the executor under a Pour Over Will is to turn over estate property to the Trustee of the living trust referenced in the Will.
• DO NOT nominate an executor who is not a US Citizen or Resident - the Probate Code of California does not permit a non-citizen, non-resident individual to be appointed as Estate Representative
• Choose an executor who is responsible, trustworthy, ethical and competent. While an executor doesn't need to have specialist qualifications, they do need to be able to handle your affairs ethically and follow your wishes. They also need to be able to manage the responsibilities involved in being an executor. 
• Confirm your chosen executor is eligible. While eligibility rules vary between states, executors generally must be aged at least 18 years old. People with criminal histories may be precluded from being executors.
• Even if your Will waives Bond, if you executor is not a resident of California, at least a minimum bond will be required. Your executor would preferably be a resident of California.
• Name a back up executor in case your nominated executor is unable to perform their duties. A common reasons they may not be able to serve may be their own death or incapacitation. 

Choosing the right executor can be challenging. A Probate Attorney can answer any questions you have about nominating the right executor. 

Common Issues in Estate Administration in California

Many issues can arise in the context of estate administration, and can create problems or challenges. An attorney can help you create a solid estate plan by navigating over potential complication and help you anticipate, address, and resolve any issues that may arise after you are deceased. With that said, here are some common estate administration issues in California worth noting here:

• An Executor may fail in trying to fulfill their duties. This can happen if they do not act in accordance with the deceased's wishes, fail to perform their responsibilities, or misuse the estate's assets. This failure may amount to a breach of their fiduciary duties and result in the personal representative being removed from their role. It is also why you may want to list an alternative.
• Disputes or challenges to a will may arise. It is not uncommon for disputes to arise between family members during the estate administration process. For example, there can be claims that a newer version of the will exists or that undue influence or fraud occurred.
• An outdated or incomplete will. If your will is missing information or contains outdated information, the executor may not know what to do with aspects of your estate. People whom you do not wish to obtain certain property or assets may be in line to receive it but for specific details in the will. You can avoid this problem by reviewing and updating your will during your lifetime, as necessary. 
• The Original Will cannot be found. The Original Will must be filed with and inspected by the Court. Failure to present the original signed will gives rise to a legal presumption that the Will was Destroyed with the Intent to Revoke. This is not an easy presumption to overcome if no compelling evidence exists why the original will cannot be located (such as a house fire, etc.).

Acting as an Estate Representative can be complex. That's why it is important to speak to a Trust and Probate attorney who can help you fully understand your obligations and the laws in your state. This is also why Estate Representatives are entitled to the same amount of statutory fee as the Attorney for the Estate - both (Estate Rep and Estate Attorney) must act as a team, with each having distinct responsibilities, during the year-long Probate process in California.

Finding the Right Legal Solution for You and Your Family

In some instances where the total value of your property might be below a certain threshold, Probate will not be needed. Also, certain assets can pass to beneficiaries without Probate by operation of law – such as life insurance policies, jointly held accounts, or assets with a designated “pay on death” beneficiary. Learn more about such non-Probate transfers here.

Developing an effective Estate plan requires that you understand your options, know the applicable California Probate laws, be mindful of property tax laws, and other legal and practical considerations. At the Law Offices of Maria N. Jonsson, PC we conduct a personalized assessment of your assets, your beneficiaries, the family dynamic, and other relevant factors before recommending a strategy that will save you and your loved ones the most time and money. Ultimately, the ease with which your beneficiaries receive your property upon death will depend on the complexity of your Estate Plan as well as the circumstances of the beneficiaries themselves (are they facing legal troubles of their own? are they disabled? are they under age of majority?, etc.). Retaining legal counsel to guide you with setting up the right Estate Plan for you will make a world of difference for your family and heirs. Such estate plan will anticipate and avoid conflicts, and will protect your beneficiaries from creditors and - sometimes - from themselves.

Contact an Estate Planning and Probate Lawyer in Los Angeles and surrounding Counties (including Ventura, Riverside and San Bernardino) Today 

Estate planning is important in California if you want to be certain that your affairs are settled and your heirs benefit from your life's work. The right Estate Representative can make all the difference and help ease the grief and stress loved ones experience.

Call (424) 383-8445 or contact us online to schedule your consultation.