New Law Avoids Probate for Estates Under $100,000

(February 1997) by Mark J. Welch, Attorney at Law

I received a call in late November 1996 from a prospective client who serves as the "successor trustee" of a deceased friend's living trust. The friend and his wife had created a living trust several years ago, and transferred all their assets into their trust, in order to avoid the costs and other perceived drawbacks of formal probate in California.

Unfortunately, after the friend died in early 1996, his wife failed to transfer the $75,000 proceeds of a life insurance policy into the name of the trust; instead, she left them in an money-market account with the life insurance company. The wife then died in mid-1996.

The successor trustee was now faced with a difficult problem: all the couple's assets were held in their revocable living trust, except for the $75,000 insurance proceeds. But under California law in effect at that time, formal probate was required for estates above $60,000. California Probate Code Sections 13100-13116.

Fortunately, in 1996, the California legislature revised the law, increasing the "small estate" amount from $60,000 to $100,000, effective January 1, 1997. I told the trustee to schedule an appointment with me on January 2, and he then came to my office to sign an affidavit (similar to the one below) allowing the transfer of the $75,000 insurance proceeds to the trust, without formal probate. A few weeks later, the insurance company sent the trustee a check, and he was able to distribute the proceeds to the beneficiaries without delay, and without spending a portion on probate fees.

The legislature also increased the value of real property that can be transferred by affidavit, from $10,000 to $20,000. California Probate Code Sections 13200-13210. However, it is extraordinarily rare for any parcel of real property in California to have such a low value. (A "small estate petition" proceeding is available for estates which include both real and personal property with a total value under $100,000, avoiding formal probate but still requiring a court hearing and formal notice to certain persons. California Probate Code secton 13150.)

Important: keep in mind that when property is transferred using the affidavit procedure, there is a risk of later adverse claims, and it is advisible to consult with an attorney before making use of this procedure to collect a decedent's assets. In addition, since this law was changed so recently, you may encounter out-of-state insurance companies and financial institutions whose books and records have not yet been updated to reflect the new law; be patient and explain that this is a recent change in the law, and ask the institution to consult immediately with its legal department to obtain approval for transfers of more than $60,000. You must also recognize that the $100,000 limit applies to the total value of all property which would otherwise be subject to probate; you cannot use two affidavits to transfer two $75,000 accounts!

Although there is a special form for the affidavit for transfer of real property under Probate Code Section 13200 (Judicial Council Form DE-305), and for seeking court confirmation of transfers of estates under $100,000 that include real property under Probate Code Section 13150 (Judicial Council Forms DE-310 and DE-315), there are no "approved forms" for an affidavit to transfer property under Section 13100, although the requirements are spelled out in Section 13101. Here is a sample form affidavit:

Declaration for Collection of Property Without Probate (California Probate Code section 13100 et seq.) HEIR1 and HEIR2 declare: DECEDENT_NAME (the decedent) died on DATE_OF_DEATH in his/her residence at DECEDENT_ADDRESS , in the city of CITY_NAME , County of COUNTY_NAME, State of California. California Probate Code section 13101(a)(1-2). At least 40 days have elapsed since the death of the decedent, as shown in a certified copy of the decedent's death certificate attached to this affidavit or declaration. California Probate Code section 13101(a)(3). No proceeding is now being or has been conducted in California for administration of the decedent's estate. California Probate Code section 13101(a)(4). The current gross fair market value of the decedent's real and personal property in California, excluding the property described in Section 13050 of the California Probate Code, does not exceed One Hundred Thousand Dollars ($100,000). California Probate Code section 13101(a)(5). The property of the decedent that is to be paid, transferred, or delivered to the declarant is as follows: {LIST THE PROPERTY, INCLUDING ACCOUNT NUMBERS FOR FINANCIAL ACCOUNTS, AND V.I.N. AND LICENSE NUMBERS FOR AUTOMOBILES.} We are HEIR1 and HEIR2, and we are the successors of the decedent as provided in California Probate Code section 13006(a) and 13101(a)(7). The declarants are the successors of the decedent (as defined in California Probate Code section 13006) to the decedent's interest in the described property. California Probate Code section 13101(a)(8)(B). The decedent died intestate, leaving no surviving spouse, and the declarants are all of the children of the decedent. or: The declarants are all of the beneficiaries entitled to receive property under the decedent's Will, a copy of which is attached. No person has a superior right to the interest of the decedent in the described property. California Probate Code section 13101(a)(9). The declarants request that the described property be paid, delivered, or transferred to the declarants. California Probate Code section 13101(a)(10). We declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct, and that this declaration was executed on ________________, 1997 at ______________, California. California Probate Code section 13101(a)(11). _______________________________ HEIR1 _______________________________ HEIR2 Notary Acknowledgment (California Probate Code section 13104(e)) STATE OF CALIFORNIA COUNTY OF _____________ On ______________, 1997, before me, the undersigned notary public, personally appeared HEIR1 and HEIR2, personally known to me (or proved to me on the basis of satisfactory evidence) to be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons (or the entity on behalf of which the persons acted) executed the instrument. WITNESS my hand and official seal. _______________________________ Notary Public Attachments: Death Certificate of DECEDENT_NAME; copy of last will and testament