How small estate administration helps large estates.

28 Dec, 2018//Posted by : admin//Category : Uncategorized

Most, if not all, of these United States have statutes that allow Will beneficiaries and/or intestate heirs to collect accounts, property, and other small assets without the expense and delay of probate court proceedings. These statutes can be helpful in several ways. In California, these statutes will be found at Probate Code ss. 13100 et. seq. They provide a clear and path to enable those entitled to obtain assets that are either directed to them by a Decedent’s Will, or by the intestacy (“next of kin”) statutes, when the loved one does not leave a will. The assets of a Decedent subject to this “small estate” process cannot total over $150,000.00.

This path is commenced by an affidavit that the heirs or nominated executor under a will swears or declares that they are the person(s) entitled to collect the asset. The statute provides for this statement to be made by declaration under penalty of perjury. However, it should come as no great surprise that financial institutions are less than willing to release accounts without notarization. That is not a big obstacle. What can be a bigger obstacle is the general reluctance of banks, insurance companies, etc. to cooperate with this form of transfer at all. As I always say, they are in the business of capturing assets. Not so willing to release them, either because of security reasons, or they just don’t want to see money leave their stewardship. In that scenario, the bank officer will usually insist that the affiant/declarant produce “letters testamentary” from a court before they will release the funds to the rightful claimant. Of course, if those probate court letters were necessary, it would make the provisions of the small estate statutes meaningless. Thankfully, the California Probate Code provides a remedy in section 13005 for this type of obstinate behavior. This statute provides that if it is necessary to bring a court action to obtain release of small estate property, the defiant entity will have to pay claimant’s attorney fees and costs. Threat of that usually results in the bank or other institution to get better advice on compliance from their legal department.

Besides the relief offered for small estates, an affidavit under those statutes also offers assistance to trust estates of any size. Successor trustees will often find that their trustor has died with small accounts or assets under $150,000.00 in value in their own name, and not vested in the name of their trust. The small estate procedure in California, and perhaps other jurisdictions, allows for these small value assets to be swept into the trust by use of the standard “pour over” Will that is regularly prepared with the trust document. When the assets outside are over $150,000.00, it will require a court petition to get those assets into the trust, but that’s another subject.

Another, less familiar, use of the small estate affidavit occurs when Decedent’s estate is not vested in a trust, and a probate proceeding is underway. Many times, the Decedent’s spouse or other relative left the Decedent an account, policy or other asset under $150,000.00, but the Decedent failed during life to collect it. In that scenario, many times a court will allow the personal representative and heirs of Decedent to file small estate affidavits as Decedent’s heirs to collect that property for the estate as well.

As you can see, the small estate procedure is quite handy. Informed, intelligent, and cooperative government agencies and financial institutions often have their own forms under these statutes, and will provide them to the proper persons to collect these small assets. In the event that they do not, and/or are difficult to deal with, a knowledgeable attorney will usually be required to shape them up.