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Estate Planning Part 3


Estate Planning and Probate
{Part 3}

by Kirk Livermont


Probate is a process using the court to implement the desires contained in an individual's last will and testament. In addition to probate there are other simplified court procedures to transfer property interests upon death, these include small estates, under $100,000, and Spousal Property Petition.

Probate and these alternatives may also be used when the individual dies without a will, intestate.

In the previous two articles in this series the probate process, its timing  and the costs of probate were discussed in detail.  This article will discuss the two alternatives to probate using the courts: the Spousal Property Petition and procedures for estates worth less than $100,000.00.

When a decedent dies leaving a surviving spouse, the spouse may petition the court to distribute the property they are entitled to either by will or intestate succession directly to them.  The procedure is the preparation of a Petition identifying the property and potential heirs, filing the Petition with the court ($320.00 filing fee), notification of potential heirs, and a court hearing.  Assuming no objections the court signs the spousal property order and the matter is done.  This can all be completed within 30 days.

Unlike probate, maximum attorney fees for this procedure are not set by statute.  Instead they are negotiated between the attorney and the surviving spouse.  To complete the two page Petition with attachments, the final Order and to appear in court should require between two to four hours of time.  The maximum fee, assuming no protracted client conferences, should be $1,250.00 at $250.00 per hour.

Thus for any estate worth more than $41,000.00 this would be the most cost effective approach, using the 3% statutory attorney fees rule of thumb for probate.

As to small estates worth less than $100,000.00, there are two alternatives depending upon whether or not the estate includes real property.  For both alternatives, the heir(s) must wait 40 days from the date of death before the property may be transferred to them. 

For small estates with no real property, the heir(s) simply complete a notarized declaration, attaching a certified copy of the death certificate, describing: (1) their status as heirs, (2) no probate has been commenced, (3) gross estate worth less than $100,000.00 and (4) a description of the property.  The declaration is presented to whomever is holding the property, e.g. a bank, and the property is turned over to the heirs.  Often banks will have these forms and attorney's services nor court involvement will not be necessary.

Where a small estate includes real property, a procedure similar to the spousal property petition is used.  In addition to the Petition an Inventory and Appraisement of the property is required with an appraisal performed by a probate referee.  The filing fee is $320.00 and the probate referee's fees would be $75.00 plus costs. 

The procedure is the same as a spousal property petition except the Petition includes a copy of the Inventory and Appraisement.  The process could be completed in 30 days; however, the probate referee usually requires 60 days.  The appraisal by the probate referee could be commenced immediately after death thus streamlining the overall time line.

As with Spousal Property Petitions maximum attorney fees are not set by statute, they are negotiated between the attorney and the heirs.  To complete the paper work  and appear at a hearing should require between three and six hours of time.  The increase in time is due to the potential time in dealing with the probate referee particularly on estates worth close to $100,000.00.  The maximum fee, assuming no protracted client conferences, should be $1,500.00 at $250.00 per hour.

Thus for any small estate worth more than $50,000.00 but less than $100,000.01 this would be the most cost effective approach.

However, there is one drawback with this approach, the heir(s) that receive the property will become personally liable for any of decedent's unpaid debts up to the value of the property received.

This and the previous two articles in this series have discussed in detail probate and other court related methods to distribute property upon death.  The next article will begin to discuss estate planning principles commencing with the ramification of how title to property is held by married couples.

Kirk Livermont is an attorney with a private practice located in Independence, California providing comprehensive estate planning services.  

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