The probate process can be complex and time consuming - especially in San Francisco probate cases involving multi-million dollars estates with diverse holdings. Here are my tips.
When a San Francisco County resident dies and has a will, someone must prove that the will is valid. That process is called “probate.” The first step in the probate process is to file the will with the San Francisco County Probate Court Clerk.
Time is of the essence here since California law says the will must be filed within 30 days after the decedent’s death.
Assets may pass through a trust
It is not uncommon for high-net-worth clients to have a trust. In such a case the majority of the decedent’s assets will pass through the trust, leaving little or nothing to be probated. If there are no assets to probate, then the legal requirements are fulfilled once the will has been lodged with the Probate Court.
However, if any assets are not held in the decedent’s trust, it is likely that they will need to be “probated” and then distributed pursuant to the terms of the decedent’s will. In that case the next step in the probate process is to file a Petition to Probate Decedent’s Estate. The petition must include the name of the decedent, his date of death, his address at the time of his death, and the name of the person filing the petition. The petition must also include:
- The name of the executor or personal representative;
- The names and addresses of the beneficiaries listed in the will;
- The names and addresses of everyone who would be legally entitled to inherit from the decedent if there were no will (that is, the decedent’s “heirs at law”); and
- The estimated value of the estate.
Once the petition has been filed, the court will set a hearing date. The person filing the petition is required by law to provide everyone who is named in the petition with notice of the hearing. That person must also make sure that a notice announcing the hearing is published in a local newspaper. That announcement must be in the format required by the Probate Code.
After the hearing, the probate judge will enter an order either granting or denying the petition. If the petition is granted, a document known as “Letters Testamentary” will be issued granting the executor authority to oversee and manage the estate is accordance with the will and the probate laws of the State of California.
Unfortunately, things might not always go so smoothly. If someone shows up at the hearing to contest the appointment of the executor, the judge will then have to schedule another hearing to allow that person enough time to file formal paperwork. If a contest is filed, it could take several hearings before a decision is made.
And this is only the beginning...
The hard work really begins once the Court has issued Letters Testamentary. No matter how small the estate, the executor must inventory the estate’s property; pay the decedent’s debts; collect any debts owed to the estate; file and pay estate, gift, and income taxes; and file annual accountings each year until the estate is closed. At the end of the process, once the court has issued an order permitting it, the executor must then distribute the remaining property of the estate to the heirs and beneficiaries.
If you are in or facing a probate in California
A qualified local probate attorney is well versed in all aspects of the complex probate process and typically assists Executors in handling these duties and obligations. If you are currently embroiled in or facing probate in California, please get in touch. I am an estate planning and probate attorney certified by the California State Bar Board of Legal Specialization as specializing in these matters, and I represent high-net-worth clients in San Francisco and surrounding areas.
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All the best,
When problems arise
Many times when a person is creating a will or a trust, s/he will nominate a child or other family member to act as executor or trustee. In theory, there is nothing wrong with doing this. However, in my many years of practice, I have seen problems arise after the death of the parent or other loved one because the trustee or executor is no longer getting along with the rest of the family. Communication has broken down, tensions have risen, and eventually the family is at war over the estate of their loved one.
Special duty of trust and responsiblity
A trustee or executor is a “fiduciary” of the estate and the beneficiaries of the will or trust. A fiduciary is someone who has a special duty of trust and responsibility to an individual or a group, such as the beneficiaries of a will or trust.
This means that the executor or trustee must always act with the best interests of the estate and beneficiaries in mind and must not intentionally engage in any act or make any decisions which could harm the estate or the beneficiaries.
Required: honest open communication
Moreover, the trustee or executor is required to act in accordance with the probate code and must communicate honestly and openly with the beneficiaries, gather all property of the estate, and prepare an accounting of all property that passes through the estate.
The benefits of a professional trustee or executor
Because of the unique and special duties of an executor or trustee, I usually advise my clients to consider naming a professional to act as executor or trustee rather than a child or other family member. This reduces the likelihood of drama and chaos if familial relationships breakdown after the client's death. Although hiring a professional costs money, I believe it is a wise investment. After all, it's better for the family to be united against the professional executor or trustee than to be at odds with one another.
Getting expert help
If you are currently planning your estate and are interested in naming a professional fiduciary to act as trustee or executor, consider your bank. For a fee, most banks are more than happy to provide such services to their customers. There are also a number of companies which specialize in acting as executor or trustee…. and in California you also have the option of naming a licensed “private professional fiduciary” – an individual who is licensed by the California Dept. of Consumer Affairs.
Compelling the executor or trustee to comply
As a beneficiary of a will or trust, if you find yourself in the position of dealing with a trustee or executor who refuses to communicate or is otherwise mishandling the estate, you are not at his or her mercy. You do have options. Whether your situation involves a misbehaving trustee or a misbehaving executor, you should consider filing a petition with the probate court to compel the executor or trustee to comply with the terms of the will or trust. If the court determines that the terms of the will or trust are not being carried out, it will enter an order requiring the trustee or executor to perform certain acts as set forth in the will or trust document within a specified time period. Failure of the trustee or executor to comply with the court's order could result in his being held in contempt and may even necessitate his removal as trustee or executor.
If you suspect mismangement or worse
You may also want to file a petition for an accounting with the probate court. If the court finds in your favor, the trustee or executor must provide a detailed breakdown of all monies or other assets which have come into or gone out of the trust. Moreover, if you believe the trustee or executor has embezzled or mismanaged the money or other assets left by the decedent (the person who died and left the will or established the trust), you may also have a civil claim for “conversion”, which is similar to the criminal charge of theft.
In cases involving an irrevocable trust, California law requires the trustee to provide the beneficiaries with a copy of the trust document upon on the death of the settlor (the person who established the trust). If the trustee has failed to provide the beneficiaries with a copy of the trust document, they should consider filing a motion to compel its production with the probate court.
If the probate judge finds that the trustee has failed and refused to provide copies of the trust document to the beneficiaries, he will order the trustee to produce the trust document within a specified period of time. Failure of the trustee to comply with the court's order could result in his being held in contempt or even removed as trustee.
Seeking removal of a trustee or executor
Another option for anyone who is dealing with a trustee or executor who is not properly handling the estate is to seek his or her removal. In some instances, the will or trust document may set forth reasons for the removal of the executor or trustee.
Additionally, the California probate code sets forth valid reasons for the removal of a trustee or executor. Appropriate reasons to remove a trustee include a breach of the trust by the trustee, the insolvency of the trustee, the unfitness of the trustee to administer the trust, a lack of cooperation among co-trustees that impairs the administration of the trust, the failure of the trustee to act, and excessive compensation to the trustee.
Under California law, an executor or administrator (the person who oversees the estate if the decedent did not leave a will) of an estate may be removed if he or she has embezzled, mismanaged, wasted the assets of the estate or committed fraud on the estate or is believed to be planning on doing so, is incapable of or otherwise unqualified to execute the duties of the position, has neglected the estate or failed to act, or if removal is necessary to protect the estate or the beneficiaries.
Moreover, an executor or administrator may be removed for any other reason authorized by law.
Seeking advice from an attorney
Dealing with these issues can be very stressful, complicated, and time consuming. Therefore, it is best to seek the advice of an experienced probate or estate planning attorney before filing any of the motions mentioned above. Look for an attorney who specializes in wills and trust, estate planning, and probate litigation rather than one who drafts the occasional simple will. If possible, seek out an attorney who is board certified in these areas of the law. You need an attorney who has extensive experience dealing with cases involving trustees and executors who may have mishandled the estate or otherwise breached their fiduciary duty.
Coming prepared
When you meet with the attorney, you should have as much information as possible available so the attorney can properly evaluate your case. That information should include details about the acts or omissions you believe the executor or trustee has committed and the dates of those acts or omissions. You should be prepared to provide any supporting documentation that you can get your hands on, especially if you believe the executor or trustee has embezzled from the estate.
Your goal in seeking an accounting and/or removal of a trustee or executor is to ensure the wishes of your loved one are carried out. Many times, the trustee or executor simply doesn't know what to do or may have made an honest mistake. Other times, the trustee or executor may be acting with their own interests in mind rather than those of the estate and beneficiaries.
Statute of limitations
Whatever the reasons behind the trustee or executor's acts or omissions, it's important that you act sooner rather than later if you suspect the estate is being mismanaged. If you do not act quickly, the courts may be unable to assist you. Remember, you only have a limited amount of time to bring certain court actions. This is known as the statute of limitations.
Moreover, if you know the estate is being mismanaged, but choose to do nothing about it for a number of years, your claim may be barred under the theory of laches. Laches means that you waited too long to take action and should not be rewarded for failing to make a claim in a more timely fashion.
Another reason to take action immediately if you believe an estate is being mismanaged is that you don't want to assets of the estate to be exhausted by the trustee or executor. Waiting could mean that you get nothing. Even if you win a lawsuit against the trustee or executor and a judgment is entered in you favor, collecting on that judgment might take years and it's quite possible, that you might never collect on it.
So, be proactive in protecting the estate and making sure that your loved one's wishes are being carried out. Don't be afraid to ask the executor or trustee for an accounting or for any other information regarding the estate that you are legally entitled to receive.
Being proactive may mean getting your own attorney
And remember, the attorney that drafted the will or trust is not your attorney, s/he's the attorney for the settlor or decedent; so, s/he cannot represent you or give you any legal advice. You need your own attorney who will represent you and work to protect your interests.
All the best,
A few weeks ago I met with “John.” His wife “Mary” died about 4 months ago. “John” and “Mary” had 3 young children. The oldest, “Johnny”, is an 18 year old freshman at the University of San Francisco. The middle son, “Josh”, is a 14 year old freshman at St. Francis. The youngest, “Jennie”, is in the 7th grade.
With tears in his eyes, John told me that Mary was a wonderful wife and mother and that they had had a wonderful life together. He told me that over the years Mary’s parents had made gifts to her of the stock in various companies, but even though they had been married for 20 years, Mary had kept the stock in her own name. He said that Mary was somewhat disorganized when it came to financial paperwork, and that he wasn’t sure where all the stock certificates were. He said that, based on the dividend checks she had received over the years, he was sure the stock was worth more than $100,000.
Mary had made out a will for herself using a commercial software package. The will provided that if John survived her for 30 days, everything would be distributed to him. If John did not survive Mary, her estate would be held in trust for their children until they reached age 25.
John told me that since Mary had a will naming him as the beneficiary and also as the executor, he intended to write to the companies and have them transfer the stock into his name. He didn’t believe me when I told him that it would not be so simple – since the stock was held in Mary’s name alone and not in the name of a trust and since it was worth more than $100,000, it would need to go through probate.
He said “but Mary had a will, and the will says I get everything”.
I tried to convince him that a will does not avoid probate – it merely permits a person to name who will be in charge (subject to appointment by the Probate Court Judge) and allows the deceased person to decide who gets his or her property.
The look on his face told me that he intends to prove me wrong.
He then told me that he and his oldest son Johnny were the witnesses to Mary’s will – and that they had had all of their signatures notarized. More bad news. The law requires two “disinterested” witnesses – that is, people who have nothing to gain by seeing that the will is admitted to probate. Since John is a beneficiary, his signature doesn’t count. All is not lost – but instead of inheriting Mary’s entire estate, the law says he can only inherit the same share that he would have inherited if she had died “intestate” (without any will at all).
John’s response was “well, that’s okay. I’m her husband, and we were married for 20 years, so I get it all anyways, right?”.
He wasn’t very happy when I told him that, no, that was not right. Mary had received the stock as gifts from her parents. Even though she had received the stock while they were married, California law provides that gifts and inheritances are the separate property of the person who receives them unless that person changes the title to community property – for example, by telling the company to add her spouse’s name onto the stock certificates. Under California law, community property goes 100% to the surviving spouse (unless the deceased spouse provides otherwise in his or her will), but separate property is split between the surviving spouse and the children. So instead of receiving 100% of the stock, John is only entitled to 1/3 of it; the rest goes to the children.
Furthermore, as I told him, because the stock was not held in a trust, he would have to provide an inventory of all of it to the Court – in fact, he would need to provide an inventory of everything that Mary had owned as her separate property. That inventory would then be submitted to the Court and available for public inspection. The inventory would also need to contain the names and the account numbers of the stock brokerage firms and mutual fund companies where Mary held her other shares of stock and some mutual funds she had purchased. John’s name and address, as well as the names and addresses of the 3 children, would all become part of the public record, too.
Furthermore, I told him that he would need to provide a copy of the notice of all of these proceedings to Mary’s sister, Susan, because Mary had named Susan as the “alternate” guardian of the children. John was quite distraught at this news. He told me that Susan and Mary had had a falling out after Mary had signed her will, and that Mary had left explicit instructions that she did not want Susan to be given any information about her estate. He became quite red in the face and started telling me all of the mean things that Susan had done during Mary’s last illnes. He was incensed that I insisted Susan had to be notified when she was clearly not going to be the guardian (since he was alive).
I calmly explained to him that, although I was the “messenger” here, these were the court rules and they had to be followed – that the probate code requires me to send notice of the proceedings to every single person named in the will. He asked me if we could go talk to the judge and tell him why this was contrary to Mary’s wishes and should not be done. I tried to explain to him that things are not like they look on “Judge Judy” – that probate is a formal legal proceeding, and that Judges don’t decide that they can ignore the rules and do whatever they wanted.
John was pretty dejected when he left my office. He has not decided to hire me yet. I suspect he’s going to try to do the probate himself, the way he thinks it should be done.
I wonder how long it will take for him to find out for himself that the process is the process, and that the Judge won’t vary it for him.
All the Best,
All the best,