Considerations When A Loved One Dies: A Summary Of Transferring Property After Death Without Probate and Use of Personal Property Affidavit for collecting Personal Property.
Not every asset owned at death must be subject to a probate proceeding in court in order to transfer. In certain circumstances, some or all of decedent’s assets may qualify for “summary probate,” “summary collection” or “set-aside proceedings.” The Summary Procedures are used to limit the size of what is known as the “probatable estate” of a deceased person. Once the probate estate is limited, there are opportunities to clean up the estate without formal probate.
By using summary procedures for assets titled in the decedent’s name and properly evaluating assets titled in a manner that allows them to be excluded from the probate estate, parties may be able to use the Affidavit Procedure to collect any remaining personal property directly from its holder without Court procedure or decision.
This blog demonstrates this informal probate strategy and procedure by highlighting the Summary Procedures, defining the property excluded from the calculation of the “probatable estate,” and the use of Affidavit to deal with remaining assets. While the use of the following may work in some situations, if the following does not represent the estate one is dealing with, contacting a practicing probate and estates attorney is advisable.
SUMMARY PROCEDURES FOR ASSETS TITLED IN DECEDENT’S NAME
These procedures shortcut what could otherwise be a lengthy and more costly formal estate administration.
- “Small estates” and “nominal” property interests: Various statutes simplify the probate of very small estates or property interests of nominal value.
• Collection or transfer of personal property by affidavit. [Prob.C. §§ 13100–13115]
• Delivery of undisputed tangible personal property to specified persons. [Prob.C. § 330]
• Transfer of real property of “small value” by affidavit. [Prob.C. §§ 13200–13210]
• Summary court determination of succession to property. [Prob.C. §§ 13150–13158]
• Small estate set-aside to surviving spouse or registered domestic partner and/or minor children. [Prob.C. §§ 6600–6614]
- Vehicles and state-registered property: If the estate otherwise qualifies to pass outside probate, related provisions of the Vehicle Code and the Health and Safety Code authorize the nonprobate transfer of vehicles and other state-registered property (mobilehomes, manufactured homes, undocumented vessels, etc.). [Veh.C. §§ 5910, 9916; Health & Saf.C. § 18102]
- Spousal/domestic partnership property: Estates of married or registered domestic partner decedents consisting of community property, quasi-community property and/or separate property passing outright to the surviving spouse or surviving registered domestic partner may qualify for a summary “spousal or domestic partner property set-aside” regardless of their size. [Prob.C. § 13500 et seq.; Fam.C. § 297.5(c)]. Special statutes also govern the nonprobate transfer of various community property interests. [See Prob.C. §§ 5010–5015, 5020–5023 & 5030–5032].
- Employment compensation: The Probate Code also authorizes the summary collection of a limited amount of employment compensation (generally up to $16,625 net, as adjusted periodically pursuant to Prob.C. § 890) owed to a deceased spouse or domestic partner. [Prob.C. § 13600(a)]. The dollar limit set forth in § 13600 does not apply to the surviving spouse of a firefighter or peace officer. [Prob.C. § 13600(d); Gov.C. § 22820(a) (amended Stats. 2021, Ch. 186; eff. 1/1/22)]. This procedure is initiated with an affidavit signed by the surviving spouse or domestic partner, or the guardian or conservator of their estate. [Prob.C. § 13600 et seq.; Fam.C. § 297.5(c)]
- Estates of “absent federal personnel”: There are special procedures for the set-aside of small personal property estates of “absent federal personnel.” [Prob.C. §§ 3701–3708, 3710–3712].
- Summary administration by public administrator: Under specified conditions, when no personal representative of a decedent’s estate has been appointed, the public administrator may be required to take charge of and administer the estate (Prob.C. § 7600 et seq.). In such event, “summary administration” procedures may be available to the public administrator; but special rules apply (Prob.C. § 7660).
- Estates Not Exceeding $184,500—Collection or Transfer of Personal Property by Affidavit [Prob.C. §§ 13100–13115]:Prob.C. §§ 13100–13115 set forth a relatively simple procedure for the nonprobate distribution of a decedent’s personal property. Decedent’s testate beneficiaries and/or heirs at law may make their claims and take title (assuming no conflicting claims) simply by presenting a statutorily prescribed affidavit to the holders of the property. [Prob.C. §§ 13100–13115. Assuming the estate’s gross fair market value does not exceed the $184,500 limit ($166,250 for decedents dying before 4/1/22) (¶ 2:7 ff.), decedent’s successors in interest may use the § 13100 procedure to:
• Collect money due decedent;
• Receive decedent’s tangible personal property; and/or
• Have transferred any “evidence of a debt, obligation, interest, right, security, or chose in action” (whether or not secured by a lien on real property) belonging to decedent. [Prob.C. § 13100]
Title to real property may not be transferred under this procedure.
- Summary Transfer of Real Property of “Small Value” by Affidavit or Declaration [Prob.C. §§ 13200-13210]: When decedent’s real property interests are of relatively small value, a nonprobate transfer procedure is available pursuant to Prob.C. §§ 13200-13210; this transfer scheme is similar to the affidavit or declaration method of collecting personal property in small estates. (Compare—realty held in joint tenancy or as community property with right of survivorship as dealt with below). The § 13200 procedure does not apply to real property held in joint tenancy or as community property with right of survivorship because decedent’s interest in such property passes outside probate by right of survivorship. The Affidavit procedure for real property is available if the total gross value of all of decedent’s California realty does not exceed $61,500 ($55,425 for decedents dying before April 1, 2022), the successors in interest may obtain marketable title by filing with the court and recording a statutory
CERTAIN WAYS OF HOLDING PROPERTY THAT AVOID PROBATE
The following manners of holding title, which is applicable to all property (including real estate), allows such property to transfer to a named party without probate administration or a summary proceeding.
1. Property held in the name of a trust, both an inter vivos, or revocable living trust, and an irrevocable trust,
2. Property held in joint tenancy or joint tenancy with the right of survivorship,
3. Property in which decedent had a life estate or other interest terminable at death (e.g., employee retirement or death benefits); or
4. Property held in community property with the right of survivorship.
5. Property held in multiple-party accounts (any “multiple-party account” (Prob.C. § 5100 et seq., to which decedent was a party at death, regardless of whether the account contained community property … but only to the extent the funds pass to a surviving party, P.O.D. payee or beneficiary.)
6. Property that is considered a retirement plan or any life insurance policy or retirement plan proceeds payable so long as there is a beneficiary designated. To the extent that no beneficiary is designated, which is equivalent to naming the estate as the designated beneficiary or the predeceasing of all named beneficiaries shall cause such proceeds to be counted as part of the decedents estate and subject to the laws governing probate.
These manners of holding title is a separate and different concept of property that That passed outright to decedent’s surviving spouse or registered domestic partner under Prob.C. § 13500 et seq. [Prob.C. § 13050(a)(1)]. That said, the holding of title in the above manners is extremely relevant to the calculation of the size of a decedents estate as such titling of property would exclude the value of those assets from the calculation of the value of the decedent’s estate value (which of course determines if summary procedures are available).
The holding of property in the above manner is how seemingly large estates might qualify for the relatively speedy and inexpensive § 13100 summary collection procedure. For example, the largest portion of decedent’s estate might consist of assets held in inter vivos trust and/or joint tenancy. When these assets are deducted from the estate’s total value, there may be only a nominal estate remaining (typically where decedent inadvertently failed to transfer one or two assets into trust or joint tenancy title). As a result, probate administration may not be needed at all.
This is why the initial calculation and assessment of a decedent’s estate is so important in determining a strategy for transferring assets after death.
PROCEEDING TO TRANSFER PERSONAL PROPERTY UNDER §13100
Once one determines that person’s estate qualifies for a transfer of personal property by Affidavit, after by excluding all of the property titled stated above, the following are the initial considerations for using an Affidavit to transfer personal property.
Eligible claimants (“successors of decedent”) are provided for in the Probate Code. Probate Code § 13100 procedure may be used by any “successor of the decedent.” [Prob.C. § 13100] This term broadly includes anyone entitled to succeed to the claimed property under decedent’s will or by the laws of intestacy (Prob.C. § 13006). Specifically, the term encompasses:
(1) Testate beneficiaries: The sole beneficiary under decedent’s last will or, if more than one beneficiary, all beneficiaries under the will may proceed under Prob.C. § 13100, regardless of whether any beneficiary is related to decedent. [Prob.C. § 13006(a)].
(a) Trusts included as “successors”: An eligible testate beneficiary successor includes a trustee of decedent’s inter vivos or testamentary trust where the trust succeeds to the particular item of property under decedent’s will. Even in the unlikely event the trust is subject to continuing court jurisdiction, the trustee may utilize § 13100 on the trust’s behalf without obtaining prior court approval. [Prob.C. §§ 13006(a), 13051(b)].
(2) Intestate heirs: If decedent died without a will, § 13100 is available to any or all of decedent’s intestate heirs under Prob.C. §§ 6401-6402. [Prob.C. § 13006(b)].
(a) “Heirs” under out-of-state law: The eligible heirs may also include “heirs” determined pursuant to another jurisdiction’s intestate succession law: If, under applicable conflict of laws principles, succession to the particular item of property is determined by the law of a sister state or foreign nation, the successors in interest under that law may use the § 13100 procedure. [Prob.C. § 13006(b)].
(3) Representatives: Certain persons in a representative capacity are eligible § 13100 claimants:
(a) Guardian, conservator or trustee of eligible claimant: As stated above, the trustee of a trust is an eligible § 13100 transferee as to items passing from decedent to the trust; the trustee need not obtain prior court approval to utilize § 13100. Likewise, guardians or conservators of the estates of eligible transferees are themselves eligible to use the § 13100 procedure on such persons’ behalf without authorization by the court where the guardianship or conservatorship is pending. [Prob.C. § 13051(a)].
(b) Out-of-state personal representative: A personal representative appointed in a sister state may act on behalf of the estate’s beneficiaries, and thus may proceed under § 13100 for the beneficiaries who would be eligible to do so. [Prob.C. § 13051(d); also see Prob.C. § 12507 (defining “sister state personal representative”)].
(c) Nominated custodian under UGMA or UTMA: Similarly, if decedent’s will authorizes a custodian to receive a devise under the Uniform Gifts to Minors Act (former Civ.C. §§ 1154-1165) or the Uniform Transfers to Minors Act (Prob.C. §§ 3900-3925) of any state, the custodian is eligible to collect the devise pursuant to § 13100 … provided the beneficiary has not yet reached the age at which the custodianship is to terminate. [Prob.C. § 13051(c)]
(d) Attorney-in-fact under durable power of attorney: An attorney-in-fact acting under a durable power of attorney may use the § 13100 procedure on behalf of the beneficiary giving the power of attorney. [Prob.C. § 13051(e)]. Note a power of attorney for a person that is deceased is not operative.
Claimants using the Affidavit (declaration) procedure may transfer the property by presenting to the “holder” (see¶ 2:18) an affidavit or declaration under penalty of perjury (CCP § 2015.5) executed in the prescribed statutory form and content and complying with specified statutory formalities. [Prob.C. §§ 13101-13104, 13106.5]. Since the property holder is not required to honor a defective § 13101 declaration, be advised it is a best practice to inquire whether the holder has a form Affidavit they require. For example, a bank or credit union may reject an Affidavit drafted by a claimant, or even an attorney (even if there is no legal basis for such rejection, in order to cause their document to be used so they are insulated from liability. The main reason for this practice is that a holder who honors a defective declaration will not receive the protection afforded by Prob.C. § 13106 (which discharges the holder from further liability with respect to the property transferred under § 13100.
As a result, it saves time to inquire first before one drafts the document.