TRUST and PROBATE
Probate
California probate for real estate can be a complex process that involves court appearances for both the real estate agent and the client. The level of authority granted in probates can vary, with some being full authority and others being limited authority. It is important for those involved in the probate process to understand the specific requirements and procedures in order to navigate through it successfully.
Both buyers and sellers need the halp of an agent familiar with probate. Without sufficient representation the process will be disappointing and lengthy. At Elevate we anticipate the issues and get them fixed before they become a problem.
Whether it is handling the transfer of ownership or addressing any potential disputes, having a knowledgeable and experienced real estate agent can greatly facilitate the probate process. With their expertise, they can guide their clients through the necessary legal steps and ensure that all obligations are met in a timely and efficient manner. However, it is important to note that California probate for real estate can be a time-consuming and involved process, so patience and careful attention to detail are essential.
Trust
Representing Trust properties, whether for a buyer or a seller, can be challenging. It is important to have the assistance of a real estate professional who is familiar with such real properties and the complex process involved. In some cases, there may be MIA trustees or missing trust documents, which can further complicate the situation. Additionally, there are instances when the seller believes that the home is held in trust, but it turns out not to be the case. In such situations, a Heggstadt Petition may be necessary to clear the title. However, this process can be lengthy, lasting up to six months, and it requires the involvement of an attorney. Therefore, it is crucial to have the right expertise and guidance when dealing with trust properties to ensure a smooth and successful transaction.
Working with Trust Attorneys
Elevate is not a law firm and we do not give legal advice. Only an attorney with trust and probate knowledge should be allowed to give legal advice about trust and probate.
Elevate is a trusted Real Estate Brokerage with extensive expertise in resolving trust and probate matters. Though we cannot and do not give legal advice, we can educate our clients with general information that allows them to make an intelligent decision about selling real property.
Elevate solves problems. With the help of social media, we have successfully located MIA trustees and executors ensuring a smooth resolution. Utilizing our strong connections with title companies, we have effectively identified misfiled grant deeds, rectifying the situation and reestablishing properties into their rightful trusts.
Elevate has also encountered and managed the challenges of a Heggstad petition, navigating through the complexities to achieve positive outcomes. Additionally, we offer a unique attorney referral program that occasionally assists clients in covering certain legal expenses, providing them with the support they need. Trust Elevate to handle your trust and probate concerns with professionalism and efficiency.
TRUST & PROBATE
Lack of agent knowledge about trust and probate is the most challenging aspect of these transactions. However, with some understanding of probate and trust properties, agents can better support their clients. Unfortunately, the only two things assured in human existence are death and taxes. It is inevitable that at some point, most clients will have to deal with the end of life. Whether it is their parents, relatives, children, or friends, they will eventually face the real estate realities of death. Therefore, it is crucial for agents to familiarize themselves with trust and probate listings in order to provide the best assistance to their clients during difficult times.
There are three distinct possibilities when handling properties after demise of the owner:
INTESTATE
After death, when there is no will or trust their possessions and assets are intestate. This means the state, through its processes, decides who gets what. If there are no heirs the state keeps (escheats) the assets of the estate. If there are heirs the process in California is as follows:
If the decedent was married, the question is whether the decedent owned community property, separate property, or a combination of the two.
The decedent's community property goes to the surviving spouse, who may have to file a spousal property petition to establish ownership.
The decedent's separate property is distributed as follows:
The surviving spouse receives all of the separate property if the decedent is not survived by issue, parents, brothers, sisters, or children of a deceased brother or sister.
The surviving spouse receives one-half of the separate property if the decedent had only one child, or issue of a deceased child.
The surviving spouse receives one-half of the separate property if the decedent left no issue, but left parent(s) or their issue.
The surviving spouse receives only one-third of the separate property if the decedent left more than one child.
The surviving spouse receives only one-third of the separate property if the decedent left one child and the issue of one or more deceased children.
The surviving spouse receives only one-third of the separate property if the decedent leaves two or more deceased children.
If the decedent was not married, the estate is distributed as follows:
To the decedent's children, who take in equal shares if they are in the same generation.
If there are no children or other issue (issue is the legal term for children, grandchildren, great-grandchildren, etc.) living, the estate goes to the decedent's parents.
If there are no parents living, the estate is distributed to the "issue of the parents." If the decedent had brothers or sisters, they will inherit the estate. If there are deceased brothers and sisters, and they had issue, the issue will inherit the share of the estate that the deceased brother or sister would have inherited.
If there are no brothers or sisters, the decedent's grandparents will inherit the estate.
If there are no living grandparents, then the "issue of the grandparents" will inherit the estate. This could include the decedent's aunts and uncles, or if there aren't any aunts and uncles, the decedent's cousins. Generally, the oldest generation that has surviving issue will inherit, but if there are deceased issue in that generation, their issue will inherit their share.
If there are no cousins, Probate Code section 6402 provides that the estate will be distributed to "next of kin in equal degree," generally meaning more distant cousins.
Court and other costs are between 2% and 15% depending on what types of assets are in the estate and what the costs of evaluation and liquidation might be.
PROBATE
When there is not a trust agreement, probate is required. There are expedited procedures for small estates, but when real estate is involved, probate is almost always triggered.
The authority level of the Personal Representative (PR-often referred to as an Executor) is determined by the probate court. When filing the probate petition the applicant requests either full or limited authority. The court issues a Letters of Testamentary which defines such authority. There are three potential possibilities:
Limited Authority
Under Limited Authority the Executor (PR) has little authority to approve disposal of assets, especially real estate. The court is required to approve the sale of estate assets. Real property can be listed and sold, but is subject to court scrutiny prior to close. This can result in someone other than the contracted buyer showing up at the court and offering an “overbid”. This can result in a bidding war, but most often does not. Under Limited Authority the court will often order an appraisal or BPO to determine value. Generally, offers at 90% or more of that value will be considered.
Full Authority
Under Full Authority the Executor has the authority to sell real property without court approval. That does not mean the Executor could sell the property for a buck. They still must represent the estate in a businesslike and reasonable manner. If they do something that appears to be outrageous or strange they may find their decision rescinded after legal action by heirs. They also may be held personally liable for a poor decision.
Small Estate
If the estate is small enough (dollar value - $184,500 in 2024) and
a. there is a will or other documentation proving the executor or,
b. All the heirs are cooperating and are willing to sign for one representative for the estate or,
c. There is only one heir
d. Any Real Estate totaled with all other assets is less than the maximum limit for Simple Estate. Unlikely in California.
NOTE: Mobile homes in a rented (leased) space are personal property, not real property.
A Simplified Procedures to Transfer an Estate can be used.
If the estate includes both personal and real property, but still meets the simplified probate threshold, the administrator can use the affidavit process but also file these forms:
Petition to Determine Succession to Real Property
Order Determining Succession to Real Property
Personal Property, Inventory and Appraisal, and Notice of Hearing
When an estate below the threshold for formal probate does not include real property, such as a house, the executor or administrator of the estate can complete a California small estate affidavit form (available from the county’s probate court office or website) that lists all the assets the person owned and their value.
In addition to the signatures of all beneficiaries entitled to inherit the listed assets, a small estate affidavit in California should include the following documents:
A certified copy of the death certificate
Proof that the person owned the property listed and proof of value (e.g., bank statements, storage receipts, stock certificates, appraisals, etc.)
Proof of your identity (a driver’s license, state ID, or passport)
Many financial institutions also require a notary’s signature and stamp on the affidavit to collect the assets (and may have additional custom forms). In general, beneficiaries must wait 40 days after the person’s death before collecting the property.
A CAUTION TO REAL ESTATE PROFESSIONALS: Probate assets cannot be legally liquidated without Letters of Testamentary or documentation of the Simplified Procedure to Transfer an Estate. Individual heirs do not have automatic authority to sell probate real property without one of these. For example, when an owner passes there is no one who can legally sign the grant deed to pass ownership to a buyer as the deceased owner was the only one with that authority. A death certificate is not sufficient for real property. A Power of Attorney, though useful in cases of incapacity, usually dies with the death of the grantor. Without the Letters Testamentary, or documentation of the Simplified Procedure to Transfer an Estate, there is not a legally approved authority to represent the estate.
Agents soliciting a probate listing must obtain a copy of the Letters of Testamentary before listing the property. Doing so without the Letters could be construed as fraud and will certainly cause problems when escrow requires the Letters of Testamentary to close. Further, without the Letters agents cannot complete the listing. One of the questions in the MLS is Limited or Unlimited Authority. Without the Letters, no one knows.
The costs of probate are largely determined by whether or not a probate attorney is hired. For larger estates, an attorney is highly recommended. The cost of probate is between 2% and 15% depending on what types of assets are in the estate, what the costs of evaluation and liquidation might be, and how much an attorney charges.
TRUSTS
Trusts are a good and legal way of avoiding probate. Trusts can be either revocable or irrevocable and each has its advantages. Most Living Trusts are revocable allowing the grantor to self-manage the estate’s assets.
A good living Trust will include the following:
Pour-over will (granting the assets in any and all wills to the trust)
Power of Attorney (useful in cases of incapacity)
Living Will
Adequate description of the desires of the Trustor and adequate instructions to the Trustee about how to proceed after death.
A Trustee and perhaps Successor Trustees are appointed. They and they alone have the authority to carry out the delineated directions of the trust. Often, in a Living Trust, the original Trustee is the maker (grantor) of the trust. In marriage, husband and wife are usually Trustees or Successor Trustees.
Even if a trust is created, it is only a box into which all assets must be placed. For example, if the real property remains in the trust grantor's personal name, the property cannot be sold by the trust and must go through probate. Real property identified in a trust must be legally transferred into the trust’s name by grant deed.
Through a California Heggstad Petition, it is possible to get a court order declaring that property listed on a trust schedule is a trust asset, despite the fact that title to the property was not formally transferred to the trust. A Heggstad is reliant on being able to prove the Trustor’s intent and is not guaranteed. It is a time-consuming process, often six months, and can be expensive as the lawyer’s clock is ticking.
Trust real properties cannot be sold, or even listed, without a copy of the Proof of Trust (a specific part of the trust agreement). Escrow will require it. Most often, the entire trust agreement is not necessary, but some title companies or escrow companies require it.
In addition to listing the accounts as a trust, bank accounts, prior to death, can be set up using a “pay on death” or “as Trustee for” designation on or with the original account signature card. Ask your bank how best to do this. The same applies to stockbroker and retirement accounts.
ISSUES
If no one can find a copy of the trust or will then, for all intents and purposes, no trust/will exists and probate is the only remaining solution. Make sure that copies of will and trust are saved where heirs, executors, and trustees can readily find them. If in doubt consult with an attorney or certified financial planner. Bank Trust Departments can also be quite useful for storing trust/will documents.
The designated Executors (Will) or Trustee(s) and Successor Trustee(s) (Trust) are deceased. When no legal signature is available, the sale of property is disallowed. The heirs must petition the court to assign a new Executor (Will) or Successor Trustee (Trust). This means additional court and legal expenses and opens the possibility of a challenge to the will or trust by heirs.
The designated Executor (Will) or Trustee(s) and Successor Trustee(s) (Trust) cannot be located. When no legal signature is available, the sale of property is disallowed. The heirs must petition the court to assign a new Executor (Will) or Successor Trustee (Trust). This means additional court and legal expenses and opens the possibility of a challenge to the will or trust by heirs.
FILING A QUITCLAIM DEED
When a Trust is created it is only an empty box into which all assets must be placed. Even if the Trust says the real property is in the Trust, that is not enough. A Quit Claim Deed must be filed with the County in which the real property is located. Deeds must be notarized before filing. An attorney is not needed to create and file the deed. Escrow offices, title companies and real estate agents should be able to assist with the steps which are:
Run a property profile to identify the existing vesting (real estate agents have access to that information, usually for free).
Obtain a blank Quitclaim Deed (real estate agent, title company, escrow company or online). Complete the form transferring the home into the name of the Trust (Example: Smith Living Trust).
Get all the owners together (yourself, Dad, Mom, Grandpa, Grandma or your kids if they've won the lottery) to meet with a notary. Many notaries today will come to your home for a small fee. Or you should be able to get a notary at your bank or at any private postal store (not the post office).
Sign Quitclaim Deed and notarize all owners.
File the Quitclaim deed with the County in which the real property is located. You can do it yourself at the County Clerks office and the fee is usually around or below $100. Some title companies and escrow companies will file it as an accommodation, especially those originally used when the property was purchased.
HEGGSTADT PETITIONS
There are occasions when the reverse of the above procedures are used to get the real property out of the Trust and back into the hands of the original owners. For Example: If the home is refinanced, lenders seldom lend to a Trust. They require the property to be in the name of the borrowers. When that happens be sure to immediately after the loan has funded put it back into the Trust as described above.
When the real property is not in the name of the trust and the original Trustee (usually owners) die there is no legal way to sell the property. The original owners are no longer around, so they can't sign anything transferring ownership, and the Trust doesn't have the authority to do so.
That is when the Heggstadt Petition comes in. If it is obvious that it was intended for the property to be in the Trust (like specifically being named in the Trust) it is possible to petition the probate court to change the vesting into the name of the Trust. This sounds simple but is not. Unless you are thoroughly familiar with probate (lets face it only Trust Attorneys really know that stuff) you will need legal help. Once the petition is completed it is filed with the court and hopefully sails right through in six months or so. These petitions are not automatic but are generally approved if properly documented.
Have a good real estate agent check the vesting for you. An ounce of prevention is worth a pound of cure. We just happen to know a good one. Click here to Contact us.