Five Juicy questions where the heck does property go upon death of decedent?

Probate= assets held in D’s name as an individual either through will or intestacy

1. Crt supervised administration of estate to make sure: 1) prop gets in the right hands & 2) make sure that the people who get prop have clean title

   1. Also, Provides orderly method of distribution

   2. Clean title reached by crt: getting order for final distribution and getting transfer recorded

      1. Form of Proof:

         1. CA- Order of final Distribution can be used like deed & recorded to show updated title

         2. UT- PR granted authority to sign over deed that transfers title that can the nbe recorded

2. General Process: Occurs in state where decedent lived/resided at time of death

   1. inventory the property AND submit inventory to court;

   2. Send NOTICE to all beneficiaries,

   3. Send NOTICE to creditors,

   4. Send NOTICE to all who would be intestate heirs (even if not included in will),

   5. File Tax returns (state/income);

   6. provide accountings to beneficiaries and to court;

   7. sell and liquidate assets;

   8. distributions to the beneficiaries

3. Why probate is BAD thing

   1. Lengthy- could last a year or more during which time the property in estate is tied up

      1. Crt hearings can take months to schedule

   2. Time consuming/inconvenient– court has to supervise probate

      1. Lots of attorney and accountant involvement

      2. Frequent need to return to court to get permission

      3. Must prepare accountings and give notice

      4. Court hearings can take months to schedule

   3. Expensive– court has to supervise probate

      1. Lots of attorney and accountant involvement

      2. Frequent need to return to court to get permission

      3. Must prepare accountings and give notice

   4. Public– probate becomes a matter of public record and some people really care about privacy

      1. Because you have to file an inventory, public knows type and value of property and who gets property

4. How to AVOID probate

   1. revocable trusts = MOST EFFECTIVE/EFFICIENT way to avoid probate!

      1. Governing instrument = trust, prop held in name of trustee of RT and terms of trust dispose of prop

   2. beneficiary designations (Payable on Deaths)- prop passes as contractual matter w/o crt involvement

      1. Governing Instrument = K, BFY designation

      2. BUT not completely adequate, PROBLEMS:

         1. Not all assets lend themselves to beneficiary designations

            1. Yes – life insurance, retirement plan, payable on death account

            2. No – tangible personal property, real estate

         2. Assets w/BFY designation still have to be coordinated with an estate plan to cover other assets

   3. joint tenancy- prop passes through right of survivorship w/o crt involvement

      1. Governing Instrument = deed that gave prop w/joint right of survivorship, transfers as matter of law

      2. BUT inadequate, PROBLEMS:

         1. Only holds for first death (what if surviving JT is already mentally incapacitated?)

         2. Creditors can access JT’s interest in prop

   4. CPWRS: Community Property with Right of Survivorship – (CA ONLY) property will automatically pass to surviving spouse. (no probate if have title in common)

      1. Special situation, usu. CP disposed of in will or intestacy; or no probate cause in RT

   5. Small Estates: (value <$100K, none of which is real property)> no need for probate

      1. Not much protection, but don’t need a lot because of small amounts involved

      2. BFY can simply sign and notarize affidavit and use affidavit to get property (go to the bank)

         1. Only danger = false affidavit, but person under penalty of perjury, and small amt of $ involved

            Utah – more streamlined probate (follows uniform probate code)

            California – very cumbersome probate ALWAYS want to avoid

            Appointment of Personal Representative Informal = presumed (never appear before judge) File application for probate with court clerk Probate just ends when it’s over; no need to file a petition to close it Clerk sends out Notice>all BFYs & intestate heirs BFYs & Heirs can sign waiver of notice when application filed don’t need to wait 10 days if all waive No objections w/in 10 days clerk can issue Letters of Administration PR now has full authority to administer estate Usu Notice of Proposed Action not required in UT Objections (any time during probate)  moves to FORMAL probate for contested issue Formal= judge only hears & rules on objections BFY can file petition w/crt to object to some issue Rest of unobjected estate goes on unsupervised Objection process still protects interested parties Supervised Administration RARE= most crt involvement in estate administration BFY (Have to be an interested party) can petition crt to grant supervised admin. if he feels crt needs to supervise what goes on (e.g., PR is doing a bad job generally; lacks trust) PR can still do almost everything EXCEPT make distributions of prop from estate w/o crt approval PR can still sell assets unless crt says otherwise if BFY wants supervision for stuff besides distribution, can file individual objections to get supervision over those specific areas So, MOST DIFFICULT process in UT similar to EASIEST process in CA (full IAEA)  illustrates inconvenience of CA Major differences between CA and UT Degree of court supervision Need for court approval Don’t need to file open/closing in UT Time/need to get on court calendar Order for Final Distribution: can be signed by the PR (deed to BFY from PR granting real estate) NOTE: Even though probate in UT is not nearly as cumbersome as in CA, revocable trusts still provide benefits of simplicity and no court involvement for the following situations: Avoiding probate altogether – no probate is better than any probate What if decedent owns property in another state? What if there is an emergency after decedent’s death that requires quick action? What if person becomes incapacitated?

            Appointment of Personal Representative File petition for probate in crt—either intestate or will—requests will (attached) to be admitted, asks for appointment of PR (“Letters”: testamentary/will; admin./intestate), requests IAEA powers (if not in will) Schedule Hearing (>2 months) (if want to contest, need to do so before or at hearing) Send Notice of Hearing (named BFYs under will and all who would be intestate heirs) Proof of notice Calendar Notes (Defects the court clerk has noticed in procedure—i.e., proof of notice, etc. Must get all cleared before hearing or hearing postponed> more 2 month waiting periods) Hearing – judge admits will, opens probate, appoints PR, grants IAEA powers, issues Letters of Administration, sets fiduciary bond (insurance policy against PR taking assets), and rules on objections> if too complicated, sets new hearing Order for Final Distribution – issued after petition and final accounting of estate; signed by JUDGE Evidence that someone owns that property Can record Order just like a deed  provides notice for chain of custody of property IAEA – Independent Administration of Estates Act Purpose = gives PR power to act w/o crt permission NOTE: still always need to file petition to open/close probate actions Still need to send “Notice of Proposed Action” PR must notify all interested in estate (BFYs, intestate heirs, creditors) about what PR plans to do w/asset regardless of PRs IAEA powers ObjectionsPR has to get prior crt approval No objections  PR can proceed w/o crt approval after a certain time FULL powers – least amount of crt supervision PR can do almost anything including buying/selling/mortgaging real property PR MAY NOT engage in transactions btwn PR (in individual capacity) & estate or btwn his attorney & estate w/o crt approval (e.g. can’t personally borrow/lend $ from/to estate w/o crt) LIMITED powers – intermediate crt supervision PR can do almost anything w/o crt approval EXCEPT buy/sell/mortgage real estate OR personally engage (or PR’s attorney engage) in transactions w/estate NONE – most court supervision PR must get court approval for everything Impact of IAEA on Fiduciary Bonds Limited IAEA allows crt to set bond for liquid assets only BUT crt should increase bond if it approves sale of real estate Ex– estate has $250K in stocks & $600K in real estate & PR has limited IAEA powers PR can’t sell real estate w/o crt approval  bond should be issued for $250K But if crt approves sale of real estate, crt should see>is now $600K more liquid assetsbond should increase to $850K

5. Additional Probate Procedures

   1. Ancillary Probate – when D owns out-of-state real property (outside state of D’s death residence)

      1. Letters of Ancillary Administration–required for PR to have authority to transfer out-of-state prop

         1. Rationale – one state does not have jurisdiction over real property in another state

            1. E.g., UT Letters of Administration are not valid for property in CA

         2. Problem = ancillary probate makes probate more expensive, lengthy, inconvenient, and public

      2. Process

         1. CA– crt opens ancillary probate and issues PR NEW, CA Letters of Ancillary Administration

            1. Ancillary probate subject to same inconvenient process as regular probate

         2. UT- easier than CA: applicant opens ancillary by filing doc w/crt w/Letters frm other state attached

      3. Revocable Trusts avoid Ancillary Probate-Successor trustee just steps in & manages that prop w/o need for ancillary probate because the property is held in the name of the revocable trust

   2. Special Administration-way to grant authority if emergency needs require action before PR>appointed

      1. Process

         1. File Ex parte petition w/crt  you quickly get a hearing before a judge

         2. Judge can issue Letters of Special Administration to the Special Administrator (fiduciary)

            1. Letters of Special Administration–narrow– only give Special Admin authority to do what needs to be done on an emergency basis

            2. Primary Letters of Administration issued later will replace Letters of Special Administration

      2. State Comparison

         1. CA – more frequent because it can take months before you can get PR to have that authority

         2. UT – not as frequent because you can get a PR appointed much more quickly-informal

      3. EX: D dies before real estate closing  need someone with authority to complete closing

         1. OR D dies before filing CofA before stat of limits expires need someone w/authority to file CofA

      4. Revocable Trusts avoid Special Administration: immediate/automatic authority granted by law

         1. Successor trustee just steps in and can act immediately without court involvement

6. Miscellaneous Probate Matters

   1. Fiduciary Bond–insurance policy to protect BFYs against possibility that PR runs-off or mismanages assets

      1. Usually waived in wills (but judge still has authority to require a FBond)

         1. Trust PR

         2. Don’t want to pay premiums

      2. Generally, bond will be in amount of assets over which the PR has control over PLUS 1 year interest

         1. CA–for limited/no IAEA powers, bond will be in the amount of liquid (i.e., non-real estate assets)  fiduciary bond should be increased if court gives approval to sell non-liquid asset

            1. If full IAEA authority, bond should cover value of real estate as well

      3. Premium is usually 0.25% of estate value per year

   2. Letters of Administration (aka Letters Testamentary) = physical evidence of your appointment as PR

10. Marital prop. in Community Property & Common Law States

    1. Community Property States (CA)

       1. Types of Property

          1. Separate Property (SP) = any property that either H or W brought to the marriage (owned before marriage) AND any gifts or inheritance received during marriage PLUS income/appreciation/sale proceeds from SP

          2. Community Property (CP) = everything else  earnings by either spouse during marriage PLUS income/appreciation/sale proceeds on CP

       2. Distribution

          1. Divorce

             1. SP – each spouse keeps his/her separate property

             2. CP – divided 50:50

          2. Death– critical Q = what did the decedent spouse have the authority to dispose of?

             1. Deceased spouse-can dispose of (or intestacy rules> dispose of) ALL his SP & ½ CP (his CP share)

                1. No ability to dispose of surviving spouse’s SP or ½ share of CP

             2. Surviving spouse – ALL her SP and retains ½ of CP

       3. Miscellaneous Points

          1. CP w/Right of Survivorship prop will pass to surviving JT by operation of law – NO PROBATE

          2. Pre-nuptial/Post-nuptial agreements – can change the nature of the prop and alter what happens upon death

          3. CA: Registered Domestic Partners – treated as if they were married for all purposes under the law

             1. If rule applies to married applies w/equal force to RDP (only distinction = word “married”)

    2. Common Law State (UT)

       1. Types of Property

          1. NOTE: marital and separate property terms are ONLY used in two isolated cases:

             1. To determine elective share of surviving spouse if he’s disinherited by titled spouse (deceased spouse had title to all property in her name and left it to someone else)

             2. In case of divorce

          2. Separate Property (SP) = same definition as SP in a community property state

          3. Marital Property (MP) = same definition as CP in a community property state

       2. Distribution

          1. Divorce

             1. SP goes to owner of SP

             2. MP distributed according to Equitable Distribution = Fair

          2. Death – critical Q = how is title held? – ability to dispose of property at death follows Title

             1. Rule = decedent at death has ability to dispose of whatever property is titled in his/her name

                1. No inquiry into when property was acquired – just look at how title is held at death

                2. Titled prop is disposed of through RT/Will of title-holding spouse or through intestacy for title-holder

                3. Special Cases – property titled in both names  TWOish possibilities

                   1. 
                      T’s in Common – “Tim & Beth Seal”  TinC  decedent can dispose of 50% of prop
                      
                   2. 
                      JT w/ Right of Survivorship – “Tim & Beth Seal as JT or as H&W”  survivor gets prop by law
                      

             2. Elective Share– if all prop is titled in name of only 1 spouse at death, non-titled spouse gets elective share

                1. Elective Share = 1/3 of Marital Property (MP)

             3. Relevant State Law= determined by property location

                1. Real property = law of state where property is located

                2. Tangible personal property = law of state where decedent was domiciled when he died

11. 
    
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