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Elderlaw: 04/15/2010

Elderlaw Advocates

Dear Len & Rosie,

My wife’s brother recently died. As nearest kin, she’s handling his affairs and hopes to keep it as simple as possible. Mostly, his affairs are very simple: no spouse, no real estate, and no bank accounts. We have already cleaned out his apartment and directed that his mail be forwarded to us. He owned a new truck, on which more is still owing than we could sell it for. Also, it appears he had a few credit cards with balances owing. Are we responsible for these things? How should we proceed?


Dear Kent,

No bank accounts in this day and age? That’s unusual but not impossible. We suppose he could have cashed his Social Security check each month at the bank and paid his landlord in cash or with a money order. From what you’re telling us, all he owned on his death was his personal possessions and his automobile, which wasn’t even paid off. It’s obvious that your brother-in-law’s estate is insolvent.

The automobile loan is secured by a lien on your brother-in-law’s truck. Since the value of the truck dropped by several thousand dollars the moment your brother-in-law drove it off the dealer’s lot, your wife cannot possibly sell the truck for enough money to pay off the loan. Fortunately, your wife does not have to try to sell the truck herself. All she should do is to contact the lienholder (the bank that gave your brother his loan) and turn the truck over to them. It’s their problem. They can deal with it.

With respect to your brother-in-law’s other creditors, your wife should send them a death certificate and a letter explaining that her brother died without an estate, that there are no assets to pay them off, and that there will be no probate. Don’t even bother sending original death certificates. A photocopy will do just as well and your wife shouldn’t have to pay for death certificates out of her own pocket. The banks should write off the credit card debt for the simple reason that they can’t squeeze blood out of a turnip.

It is important to know that your wife is not personally responsible for the debts of her brother under any circumstances unless she was a co-signer on his debts. Only the assets owned by your brother-in-law upon his death are subject to the claims of his creditors.

That leaves your brother-in-law’s personal property. Technically, his personal possessions are assets of the estate and should be liquidated to raise money to pay off his creditors. But in practice, this never happens unless the personal property is of significant value. Your wife can keep her brother’s belongings for herself, and give what she does not want to charity.

Len & Rosie

Dear Len & Rosie,

I have heard conflicting information about trusts vs. wills regarding probate. If you only have a will, does it have to go through probate in California? If so, how long does that process take and how much does the family “lose” to probate?


Dear Charlotte,

The answer to the question, “Is my estate going to pass through probate?” does not depend on whether or not you have a will. The need for probate depends on the value of your probate estate. If the total value of your estate is less than $100,000, your heirs can collect your estate 40 days or more after your death, with small estate declarations described in California Probate Code section 13101. Many banks have their own forms for this, so a lawyer may not be needed at all. Transferring real property of small value is harder. Your heirs will have to have the property appraised by a California Probate Referee and petition the court. But it’s still a lot easier, faster, and cheaper than a full-blown probate.

If the total value of your estate is $100,000 or more, then probate is necessary. Probate is time-consuming and typically takes anywhere from 9 to 15 months. Probate is also expensive. Probate lawyer fees are set by statute as follows: 4% of the first $100,000; 3% of the next $100,000; 2% of the next $800,000; and 1% of the amount above $1,000,000.

The lawyer for a modest $500,000 estate gets paid $13,000. Since the executor gets the same amount, the total fee is doubled to $26,000. And this does not count “extraordinary” fees that are routinely approved by the court for “extra” work such as selling your home.

How can you avoid this? The operative word here is “estate.” Assets in your probate estate must pass through probate or by small estate declarations and petitions. The trick is to hold title to your assets outside of your probate estate so they will not be subject to probate after your death.

You can avoid probate by holding title to your assets in joint tenancy with your heirs, or by using bank account pay-on-death beneficiary designations. Surviving spouses inheriting an estate can also avoid probate with a Spousal Property Petition. The problem is that joint tenancy can backfire. Your children may decide to take the money and run – it happens sometimes. Also, if your children are on title to your home, you’ll have to ask them permission if you want to sell your home or take out a new loan. Your home could even be subject to the claims of their creditors.

For these reasons, the best way to avoid probate is with a revocable trust. Trust assets are not part of your probate estate and are therefore not subject to probate. A revocable trust is also completely under your control so you will not have to seek your children’s approval for what you do with your own property.

Len & Rosie

Len Tillem and Rosie McNichol are elder law attorneys. Contact them at 846 Broadway, Sonoma, CA 95476, by phone at (707) 996-4505, or on the Internet at Len also answers legal questions each weekday, Noon-1 p.m. and Sundays, 4-7 p.m. on KGO Radio 810 AM.

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