Frequently Asked Questions About Trust Administration and Probate In The West Valley & Beverly Hills

Although many of the same steps are involved in probate and trust administration, there are a few important differences in these two ways to settle a deceased person’s estate. Probate is a court-controlled process that is required to transfer assets when assets are in the deceased’s name only. An executor is named to present a list of all the deceased’s holdings to the court, who will then subtract any outstanding debts from the estate before releasing the rest to beneficiaries. Some of the disadvantages to probate are that the proceedings are public record, it is often expensive, and it can take a long time before assets are distributed.

A living trust allows assets to be transferred without going through probate. If a loved one has assets in a trust in his sole name and he becomes incapacitated or passes away, the assets immediately come under the control of the successor trustee named in the trust agreement. The court is not involved since the “owner” of the assets has not changed—the trust is still the owner—allowing the estate transactions to remain private. In addition, the new trustee can access accounts immediately, making trust administration typically shorter and less expensive than probate. However, the trustee is legally responsible for the management and distribution of trust assets, and the trust must have been properly funded to avoid probate proceedings.

After someone passes away who had a trust, trust administration must be completed by the Successor Trustee named in the trust. There is much to do. Generally a Successor Trustee will carry out his or her duties with the help of an experienced estate planning attorney.

Even though there are many duties for the Successor Trustee to carry out (e.g. notice to beneficiaries, manage assets, file tax returns, pay off creditors, etc.), trust administration is less expensive (usually 1/5th the cost of probate) and easier than Probate.

The answer to your question depends on the complexity of the trust assets, whether any creditors have claims on the trust assets, the tax implications of settling the trust, and whether any of the beneficiaries contest the proposed settlement. A simple trust settlement could take as little as a few months, while other trust settlements may take significantly longer.

Factors That Make Some Trust Settlements Take Longer

A trust may take longer to settle if:

• There are many assets. Every asset must be located and valued before a settlement occurs.
• Assets are hard to value. Trustees have a fiduciary duty to the beneficiaries of the trust. This means that they need to get a reasonable value for each asset. This can take some time in a poor economy or if there is no ready market for a specific asset.
• A beneficiary cannot be located. All named beneficiaries should be informed of the trust before a settlement is reached.
• A family member or beneficiary is contesting the validity of the trust. This may occur if the person was not informed of an estate plan and believed it to be something other than what existed at the time of the decedent’s death. Sometimes, if children or grandchildren are treated differently or if significant assets are left to charity, then a dispute may arise.
• Creditors claim a right to the trust property. Some creditors, such as the IRS and hospitals, may claim a right to the trust assets to satisfy existing debts.

Any of these factors can stretch the settlement of the trust out by months or years, depending on the unique issue.

How an Attorney Can Help a Trust Settle Fairly and Quickly

If you are a trustee or a trust beneficiary and you believe that the trust is not being settled quickly enough, then you should consult with a lawyer. You may be able to go to court to force action to settle the estate, but there are pros and cons to this that should be thoroughly explored with an attorney before you do anything. Your goal may be a quick settlement of the trust, but that shouldn’t come at the expense of a fair settlement of the trust.

To learn more about your rights and for help settling a trust, please contact us today via this website or by phone to schedule a free and confidential consultation.

Trustees have important legal responsibilities. When you were asked to be a trustee, you may have been honored and eager to help. While those things may still be true, now you have an important job to do and certain legal responsibilities that must be fulfilled.

What’s Expected of You

As a trustee, it will be your responsibility to:

• Identify all trust assets.
• Treat all of the beneficiaries equally—unless the trust states that you can do otherwise.
• Make trust distributions according to the terms of the trust.
• Make sure that you do not use the trust assets for your own benefit or combine trust assets with your own.
• Invest trust assets in a reasonable way that will allow them to grow with little risk.
• Keep accurate trust records.
• Report to the beneficiaries as required.
• File all applicable tax returns.

Other responsibilities may also be described in the trust document.

You Don’t Have to Do This Alone

Being a trustee can take a lot of time and a lot of effort. It can also put you at risk of being sued if you make a mistake. Accordingly, you may want to protect yourself by working with professionals who can make sure that you are doing everything correctly. For example, an accountant can help with tax returns, a financial planner can help you with investments, and a lawyer can make sure that you are complying with all applicable laws so that you, the trust grantor, and beneficiaries are all protected.

While not every trust beneficiary needs a lawyer, many will benefit from the experience of a skilled attorney. If you are a trustee, then we encourage you to contact us today for an initial consultation about your rights. If we believe that you can handle your trustee duties independently, then we will tell you that. Likewise, if we believe that we can help you comply with applicable laws and administer the trust fairly, then we will also tell you that.

In some situations, the trust itself may pay for the professional services needed by the trustee. Therefore, you have nothing to lose by scheduling a free consultation with us. Please contact us via this website or by phone today to learn more.

Technically, probate means “proving the will” through a probate court proceeding. Most people think of it as a long, drawn-out and costly legal process to ultimately transfer property from the decedent to the beneficiaries.  

When someone dies with a will, the named executor will need to open probate by filing a Petition For Probate with the court.  If the decedent had no will, someone will need to open an “administrative” probate by filing a petition. The court will appoint the administrator and will ultimately distribute assets to the decedent’s closest living heirs at law, as specified by statute.

If, in your lifetime, you don't make estate plans, your death could bring about a long process before distribution of your assets. It's called probate.

Probate is expensive and the longer it goes on, the less your beneficiaries will receive. So, by working with an attorney well-versed in drafting estate plans, you can avoid probate and all of the difficulties it could bring.

There are four ways to pass on your assets and avoid probate:

1. Revocable Living Trusts

Certainly, the living trust avoids probate and that’s why people do it. So, for example, a new grant deed will be recorded that transfers title from the married couple’s names to their trust and thereby avoid probate of the home. So if your assets are titled in the name of your trust and you become incapacitated or pass away, the assets immediately come under the control of your successor trustee named in the trust agreement. The court is not involved since the “owner” of the assets have not changed—the trust is still the owner—allowing the estate transactions to remain private. In addition, the new trustee can access accounts immediately, making trust administration typically shorter and less expensive than probate. However, the trustee is legally responsible for the management and distribution of trust assets, and the trust must have been properly funded to avoid probate proceedings.

2. Death Beneficiaries

Many types of assets, such as life insurance and retirement accounts, transfer to a designated beneficiary when you die. Since they aren't part of your estate upon your death, they are not an asset to be probated.

Other less-well-known types of assets not typically associated with death beneficiaries include:

• Payable-on-Death Accounts: This can be used for bank accounts and offer one of the easiest ways to keep money - even large sums of it - out of probate. All you need to do is fill out a simple form, provided by the bank, designating the person you want to inherit the money in the account at your death. At your death, the beneficiary just goes to the bank, shows proof of the death and of his or her identity, and collects whatever funds are in the account. The probate court is never involved.
• Retirement Accounts: Funds in retirement accounts such as IRAs and 401(k)s do not have to go through probate after your death. The beneficiary you've named can claim the money directly from the account custodian. If you're single, you're free to choose whomever you want as the beneficiary. You can also name a secondary beneficiary, who will inherit the money if your first choice dies before you do or at the same time. If you're married, your spouse may have certain rights to some or all of the money. In California (a community property state), chances are your spouse owns half of what you have in a retirement account. 
• Transfer-on-Death Registration of Securities: California adopted a law (Uniform Transfer-On-Death Securities Registration Act) that lets you name someone to inherit your stocks, bonds or brokerage accounts without probate. It works very much like a payable-on-death bank account.
• Transfer-on-Death Registration for Vehicles: California offers car owners the sensible option of naming a beneficiary, right on the registration form, to inherit the vehicle. It's a simple, effective way for folks to pass on their vehicles and small boats.
• Transfer-on-Death Deeds for Real Property: In 2016, California allowed the use of transfer on death deeds for real property. But you should consult an attorney as there are certain caveats to consider.

Note that there are caveats associated with using beneficiary designations and we urge you to consult an estate planning attorney to discuss further. We always advise against passing on assets to beneficiaries outright and unprotected. Learn more here.

3. Joint Ownership of Property

• Joint Tenancy with Right of Survivorship: Property owned in joint tenancy (typically real property but is used in bank accounts as well) automatically passes, without probate, to the surviving owner(s) when one owner dies. It's easy to set-up but there are a number of caveats attached to its use. First, there is no step-up-in-basis upon the death of the first owner which will result in greater capital gains taxes upon the sale of the property. Second, the co-owner can sell or mortgage his or her share -- or lose it to creditors. And finally, a co-owner may not realize that they can't leave their share to someone else in their will or trust. Upon their death, it automatically goes to the surviving co-owner(s). 
• Tenants-in-Common: Real property owned as tenants-in-common avoids some of the drawbacks associated with joint tenancy. There is a step-up-in-basis upon the death of the first co-owner hence minimizing the capital gains tax issue. And a co-owner can leave their share of the property to someone else in their trust (or will).

4. Gifts

You can give gifts while you're alive, such as tuition money to your grandchildren. But be aware that this may require the advice of an estate planning attorney if gifting is associated with estate tax planning or Medi-Cal planning.

Note that there are simplified procedures for small estates.  If the total value of all the assets you leave behind is $150,000 or less in California (as of 2019), the people who inherit your personal property -- that's anything except real estate -- may be able to skip probate entirely. If the estate qualifies, an inheritor can prepare an affidavit (available online) stating that he or she is entitled to certain property under a will or state law. When the person or institution holding the property -- for example, a bank where the deceased person had an account -- receives the affidavit and a copy of the death certificate, it releases the money or other property.

Here is a brief overview of the process:

• Identify the property owned by the decedent.
• Determine who is legally entitled to inherit the estate, whether the decedent left a will or died without one.
• File the petition for probate and obtain “Letters” from the court that will enable the executor (or administrator) to take control of the assets.
• Marshall the financial accounts into an estate account.
• Appraise assets.
• File a Final Report with the court and request an Order For Distribution.

Probate is a legal proceeding that is used to wind up a person’s legal and financial affairs after death. In California probate proceedings are conducted in the Superior Court for the county where the decedent lived, and can take at least 8 months and sometimes as long as several years. The California Probate Code sets the maximum attorneys fees for a probate: 4% of the first $100,000 of the estate, 3% of the next $100,000, 2% of the next $800,000, and 1% on amounts over 1 million. It is noteworthy that the fees to the attorney are calculated on the gross fair market value of the property going through probate. Also note that the executor is entitled to the same amount of fees.