How To Get Money Due To You From Someone Who Has Died?

Probate is the field of law that determines how an estate must be divided. Each state has its own laws and statutes requirements to determine if and how an estate must be probated. The probate court will supervise the process when a deceased person (a decedent) leaves assets to distribute, such as bank accounts, real estate, and financial investments with or without a will. The probate court provides the final ruling on the division and distribution of assets to beneficiaries.

In many cases, the decedent has established documentation, which contains instructions on how their assets should be distributed after death and designates in such documents who oversees implementing this process.  This involves collecting the deceased’s assets to pay any remaining liabilities on their estate and distributing the assets to beneficiaries. Where a decedent fails to establish such documents while alive, State law and the probate courts will dictate how the estate is administered and to whom assets get distributed to.

Probate With a Will 

A deceased person with a Will is known as a testator and he or she is deemed to have died “testate.” When a testator dies, the person designated as the executor under the Will is responsible for initiating the probate process. The probate process for a testate estate includes distributing the decedent’s assets according to the Will.

Probate Without a Will 

When a person dies without a Will, a person is to have died intestate. An intestate estate can also occur when a written Will is presented to the probate court and the probate court has been deemed the Will to be invalid. The probate process for an intestate estate includes distributing the decedent’s assets according to State law. State law does not allow for a blood-line heir to be disinherited.  That can only be done using a Will.

What Is The Probate Process?

A probate court proceeding begins with the appointment of an administrator or executor to oversee the estate of the deceased person. Such personal is typically called the “personal representative.”  The personal representative receives all legal claims against the estate and paying off the outstanding debts. Also, the personal representative is tasked with locating any legal heirs of the deceased, including surviving spouses, children, and parents. Then the probate court will assess what assets need to be distributed among the legal heirs and how to distribute them.

The probate process can take a long time to finalize and can become costly, therefore it is important to know whether a probate is required following the death of an individual. The more complex or contested the estate is the more time it will take to settle and distribute the assets. Furthermore, the proceedings of probate court are publicly recorded so avoiding probate would ensure that all settlements are done privately.

Note though that having a Will does not mean that probate is avoided, it just serves a roadmap for the probate court. There are several options involved with end of life planning to help avoid the probate process.

How To Get Money Due To You?

When a person owes you money and dies funds can still be potentially be recovered from the decedent if proper procedure is filed. If someone dies and they owe you money, you are a creditor of their estate. Under the California Probate Code, a creditor has one year to bring a file a claim in probate court against the estate or they are barred by law from enforcing that debt. If the funds are not secured by real property, such a mortgage, a creditor has a limited amount of time to file or they are barred by law from collecting their debt from the decedent’s estate.

  • Filing a Statement of Claim – Any creditor of the deceased person may prepare a written “Statement of Claim” to try to recover from the decedent’s estate.  The Statement of Claim is then filed in the probate case of the decedent. The Statement of Claim should include the following information: the basis of the claim; the name and address of the Claimant (and their attorney); the amount of the claim; when the amount is due or will become due; if the debt is contingent or unliquidated; and if the debt is/is not secured. When a Statement of Claim is timely filed in a probate case, the person administering the probate case will have to resolve the claim by either: paying the claim, objecting to the claim, paying a portion of the claim, or not paying any of the claim if the estate has insufficient assets to pay the claim.
  • Filing a Caveat – If there is no probate case for the decedent, a Statement of Claim cannot be filed as there is no one in place to resolve the decedent’s debts.  However, a document called “Caveat” can be filed with the probate court in the county where the decedent resided at the time of their death.  The Caveat is a written notice to the court so that the person who filed the Caveat, known as the “Caveator”, is notified if any probate case is filed in the decedent’s name. When a creditor files a Caveat, the Clerk of Court is required to notify the creditor if a probate case is started and to provide the creditor with contact information for the person who initiated the probate proceedings.  Once creditor is notified of a probate case being opened the Statement of Claim would then be prepared and filed in the probate case by the Caveator.

What Should You Do?

Consider reaching out to a Trusts and Estates and/or Probate Attorney such as those at the Law Offices Of Jeffrey B. Kahn, P.C. We are always thinking of ways that our clients can save on taxes, trusts and estates planning, and probate matters. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County (Irvine), Los Angeles and elsewhere in California are highly skilled in handling tax and probate matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income. Also, if you are involved in cannabis, check out what our cannabis tax attorney can do for you. Additionally, if you are involved in cryptocurrency, check out what a bitcoin tax attorney can do for you.

Were You Disinherited From An Estate? Are You Receiving A Different Amount In An Inheritance Than What You Expected? Read This For Your Options.

Were You Disinherited From An Estate? Are You Receiving A Different Amount In An Inheritance Than What You Expected? Read This For Your Options.

Probate is the field of law that determines how an estate must be divided. Each state has its own laws and statutes requirements to determine if and how an estate must be probated. The probate court will supervise the process when a deceased person (a decedent) leaves assets to distribute, such as bank accounts, real estate, and financial investments with or without a will. The probate court provides the final ruling on the division and distribution of assets to beneficiaries.

In many cases, the decedent has established documentation, which contains instructions on how their assets should be distributed after death and designates in such documents who oversees implementing this process.  This involves collecting the deceased’s assets to pay any remaining liabilities on their estate and distributing the assets to beneficiaries. Where a decedent fails to establish such documents while alive, State law and the probate courts will dictate how the estate is administered and to whom assets get distributed to.

Probate With a Will 

A deceased person with a Will is known as a testator and he or she is deemed to have died “testate.” When a testator dies, the person designated as the executor under the Will is responsible for initiating the probate process. The probate process for a testate estate includes distributing the decedent’s assets according to the Will.

Probate Without a Will 

When a person dies without a Will, a person is to have died intestate. An intestate estate can also occur when a written Will is presented to the probate court and the probate court has been deemed the Will to be invalid. The probate process for an intestate estate includes distributing the decedent’s assets according to State law. State law does not allow for a blood-line heir to be disinherited.  That can only be done using a Will.

What Is The Probate Process?

A probate court proceeding begins with the appointment of an administrator or executor to oversee the estate of the deceased person. Such personal is typically called the “personal representative.”  The personal representative receives all legal claims against the estate and paying off the outstanding debts. Also, the personal representative is tasked with locating any legal heirs of the deceased, including surviving spouses, children, and parents. Then the probate court will assess what assets need to be distributed among the legal heirs and how to distribute them.

The probate process can take a long time to finalize and can become costly, therefore it is important to know whether a probate is required following the death of an individual. The more complex or contested the estate is the more time it will take to settle and distribute the assets. Furthermore, the proceedings of probate court are publicly recorded so avoiding probate would ensure that all settlements are done privately.

Note though that having a Will does not mean that probate is avoided, it just serves a roadmap for the probate court. There are several options involved with end of life planning to help avoid the probate process.

Disinheritance or receiving less than expected in a will or trust

Disinheritance is the act of intentionally excluding someone from inheriting your assets. Specific legal rules regarding disinheritance vary by state and spouses and minors may have protections. Disinheritance must be stated clearly and explicitly in a will or trust to avoid ambiguity and potential legal disputes, just excluding someone is not enough.

Contesting A Will Or Trust.

State law does not allow for a blood-line heir to be disinherited.  That can only be done using a Will or Trust. A person who contests a Will or Trust must be able to prove in probate court that fraud, diminished mental capacity, contractual obligations or other problems existed with the decedent’s estate plan that would invalidate the Will or Trust including any amendments.

People cannot contest decision to disinherit them or give them a certain amount simply because they believe it was unfair. There must be legal grounds for them to contest a Will or Trust, such as:

  • They believe the decedent they are the heir to was not of sound mind when drafting the Will or Trust including any amendments.
  • The Will or Trust including any amendments was not properly witnessed/executed.
  • They suspect the decedent made the Will or Trust including any amendments under duress or undue influence.
  • Factual error that resulted in the decedent leaving you out (for example, a disagreement over lifestyle choices. Such as, your parents disinherit you because they believed you were using illicit drugs or abusing alcohol and you can prove that you were not then you may be able to contest the Will or Trust).
  • Elder abuse.
  • Fraud.
  • Forgery.
  • Lack of due execution, which means the proper legal steps were not followed when the will was signed. Under California law, a will must be signed before two “disinterested witnesses” who are physically in the presence of each other and the testator.
  • Mistake, such as the decedent mistook the document they were signing to be something else other than a will or trust.
  • For a will to be revoked it usually needs to be destroyed, replaced or modified. For a trust to be revoked the process may be a little different than a will.

Not only must you have the legal grounds to contest a Will or Trust, you must also have standing. Persons with standing to contest a will or trust generally include, beneficiaries, heirs of the decedent or beneficiaries under the prior will or trust. The probate court is usually not flexible on the meaning of standing.

What to expect in contest proceedings.

If you have been kept out of a Will or Trust or you are to receive less than you expected and have the grounds to challenge it, a filing with the Probate Court making your claim must be made.  The probate court will schedule a hearing at which time you will be able to present any evidence you have supporting your claim. The probate court will then review the evidence and make a decision. If it can be proven the provisions of the document are invalid based on a legal ground, the probate court may order for the document to be voided. The decedent’s assets will either be distributed to their heirs in accordance with the state’s intestate succession statutes or to beneficiaries under a prior valid version of the document if the decedent has executed one. There is a deadline for contesting a Will once the probate process has begun and if you miss the deadline then you may not be able to contest a Will. Also, know whether a Will includes a “no-contest clause” which is especially important if you content that you are receiving less than you expected. A no-contest clause disinherits anyone who contests the Will and does not prevail in probate court in a Will contest.

What Should You Do?

Consider reaching out to a Trusts and Estates and/or Probate Attorney such as those at the Law Offices Of Jeffrey B. Kahn, P.C. We are always thinking of ways that our clients can save on taxes, trusts and estates planning, and probate matters. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County (Irvine), Los Angeles and elsewhere in California are highly skilled in handling tax and probate matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income. Also, if you are involved in cannabis, check out what our cannabis tax attorney can do for you. Additionally, if you are involved in cryptocurrency, check out what a bitcoin tax attorney can do for you.

How to Avoid Probate Using Trusts And Other Creative Means

How to Avoid Probate Using Trusts And Other Creative Means

Probate is the field of law that determines how an estate must be divided. Each state has its own laws and statutes requirements to determine if and how an estate must be probated. The probate court will supervise the process when a deceased person (a decedent) leaves assets to distribute, such as bank accounts, real estate, and financial investments with or without a will. The probate court provides the final ruling on the division and distribution of assets to beneficiaries.

In many cases, the decedent has established documentation, which contains instructions on how their assets should be distributed after death and designates in such documents who oversees implementing this process.  This involves collecting the deceased’s assets to pay any remaining liabilities on their estate and distributing the assets to beneficiaries. Where a decedent fails to establish such documents while alive, State law and the probate courts will dictate how the estate is administered and to whom assets get distributed to.

Probate With a Will 

A deceased person with a Will is known as a testator and he or she is deemed to have died “testate.” When a testator dies, the person designated as the executor under the Will is responsible for initiating the probate process. The probate process for a testate estate includes distributing the decedent’s assets according to the Will.

Probate Without a Will 

When a person dies without a Will, a person is to have died intestate. An intestate estate can also occur when a written Will is presented to the probate court and the probate court has been deemed the Will to be invalid. The probate process for an intestate estate includes distributing the decedent’s assets according to State law.

What Is The Probate Process?

A probate court proceeding begins with the appointment of an administrator or executor to oversee the estate of the deceased person. Such personal is typically called the “personal representative.”  The personal representative receives all legal claims against the estate and paying off the outstanding debts. Also, the personal representative is tasked with locating any legal heirs of the deceased, including surviving spouses, children, and parents. Then the probate court will assess what assets need to be distributed among the legal heirs and how to distribute them.

The probate process can take a long time to finalize and can become costly, therefore it is important to know whether a probate is required following the death of an individual. The more complex or contested the estate is the more time it will take to settle and distribute the assets. Furthermore, the proceedings of probate court are publicly recorded so avoiding probate would ensure that all settlements are done privately.

Note though that having a Will does not mean that probate is avoided, it just serves a roadmap for the probate court. There are several options involved with end of life planning to help avoid the probate process.

Bypassing Probate

Use Of Probate Affidavits – If an estate is small enough to bypass the probate process, then the estate’s asset may be claimed using alternative legal actions, such as an affidavit.  State law will determine whether this process is available and if so the limitations and restrictions.

Use Of Beneficiary Designations – Some assets can bypass probate because beneficiaries have been initiated through contractual terms, such as pension plans, life insurance proceeds, 401(k) plans, medical savings accounts, trusts, living trusts, and individual retirement accounts (IRA) that have designated beneficiaries. However, if the beneficiary designation is missing or rules of succession for the asset are not clear, then the asset is transferred according to the Will, or to the deceased’s estate and therefore the asset will need to go through probate.

Joint Tenancy with the Right of SurvivorshipProperty owned in joint tenancy automatically passes, without probate, to the surviving owner(s) when one owner dies. Joint tenancy often works when couples (married or not) acquire real estate, vehicles, stocks, bank accounts, securities, or other valuable property together.  In Non-Community Property States, married couples (or registered domestic partners or civil union partners) take title not in joint tenancy, but in “tenancy by the entirety”. Both avoid probate. Joint tenancy is easy to create and easy for the survivor to transfer title to himself or herself after one owner dies. When one joint owner dies, the surviving owner(s) automatically get the deceased owner’s share of the joint tenancy property.  The property doesn’t go through probate court—the survivor(s) still need to fill out some paperwork and present it with the death certificate to the keeper of the ownership records to obtain the property into their names.  If you’re a joint tenant, you can’t leave your share to anyone other than the surviving joint tenants. The surviving joint tenant will automatically own the property after your death.  However, there are some drawbacks to joint tenancy such as, the last surviving joint tenant must use another method to avoid probate at death, probate isn’t avoided if both owners die simultaneously, share of each owner must be equal in most states, and if you own property by yourself, adding a joint tenant requires making a gift of a half-interest in the property.

Utilizing Trusts To Avoid Probate

Trusts are created by contracts usually set up with a written contract called a trust agreement. The trust maker (usually called the grantor or settlor) creating the trust will need to name a trustee (or trustees) in charge of the trust and the trust property, and the trust agreement must name a beneficiary or purpose for whom the trust property is held.  A trust can be revocable or irrevocable.

  • Revocable Trusts (sometimes called Living Trusts) – the grantor often names himself or herself as the initial trustee. The trust agreement should provide for successor trustees that can replace the initial trustee once the initial trustee steps down. The initial beneficiary of a revocable trust is usually the grantor, and when the grantor dies, the grantor’s children are usually the successor beneficiaries.  The trust agreement is a legal document, similar to a Will. The trust agreement lays out the terms, rules and provisions of the trust and the assets in it. A trustee who has a fiduciary duty is designated by the grantor as the individual (or entity) who, at a certain point, will control those assets for the benefit of the beneficiaries. The trust agreement allows a trustee to manage the assets in the trust and transfer them to beneficiaries after the grantor’s death. However, unlike a Will a trust takes effect while the grantor is living, and you can have both a trust and a Will. The trust does not have to go through probate for assets to go to beneficiaries when the grantor dies or becomes incapacitated. Assets must be assigned to the trust to be covered by its terms. That means they are re-titled to indicate ownership by the trust. The types of assets that can be assigned to (or fund) a trust include real estate (land, commercial property, homes), financial accounts (life insurance policies, checking accounts, savings accounts, money market accounts, stock and bond certificates, money owed to you, non-qualified annuities), personal property (jewelry, artwork, antiques), and business interests.
  • Irrevocable Trusts – operate in a similar manner as revocable trusts; however, oince executed the terms cannot be changed. They are typically used where the value of the estate is expected to be higher enough that there will be estate taxes or the grantor desires a layer of asset protection.  Special rules apply in order to address these objectives or concerns.  Irrevocable trust agreements should name a trustee other than the grantor, and an irrevocable trust will often name a beneficiary who is not the grantor.

Benefits of Trusts

In both revocable and irrevocable trusts, the trust agreement will name a trustee who has legal control and authority over the trust, and the trust agreement will also name a beneficiary who has equitable rights over the trust property. For either kind of trust, the trust maker must title property into the name of the trust, usually by naming the trust as owner of a financial account, or perhaps by filing a deed with a county recorder, naming the trust as owner of real property. Also, trusts avoid delays, probate costs, publicity from probate and family disputes, may be drafted to protect property from going to a beneficiary who has creditors or to preserve trust property from going to a beneficiary using government benefits, and they may help prevent many costly estate administration mistakes, such as taxes and beneficiary disputes.

What Should You Do?

The probate process could be expensive and complex especially during a time of grief. Consider reaching out to a Trusts and Estates and/or Probate Attorney such as those at the Law Offices Of Jeffrey B. Kahn, P.C. We are always thinking of ways that our clients can save on taxes, trusts and estates planning, and probate matters. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County (Irvine), Los Angeles and elsewhere in California are highly skilled in handling tax and probate matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income. Also, if you are involved in cannabis, check out what our cannabis tax attorney can do for you. Additionally, if you are involved in cryptocurrency, check out what a bitcoin tax attorney can do for you.

What You Need To Do When A Decedent Has Outstanding Tax Returns Or Outstanding Tax Liabilities?

A taxpayer who dies with unfiled income tax returns and/or outstanding tax liabilities to the IRS or any State tax agency complicates the administration of the decedent’s estate or trust.  That is because the estate or trust will now be accountable to creditors, including the IRS and State tax agencies given that the decedent’s rights, liabilities, assets and interests transfer to their estate when they pass away. Because the resolution of these tax issues will require the appointment of a personal representative, it is necessary to first open a probate administration.

What is Probate?

Probate is the field of law that determines how an estate must be divided. Each state has its own laws and statutes requirements to determine if and how an estate must be probated. The probate court will supervise the process when a deceased person (a decedent) leaves assets to distribute, such as bank accounts, real estate, and financial investments with or without a will. The probate court provides the final ruling on the division and distribution of assets to beneficiaries.

In many cases, the decedent has established documentation, which contains instructions on how their assets should be distributed after death and designates in such documents who oversees implementing this process.  This involves collecting the deceased’s assets to pay any remaining liabilities on their estate and distributing the assets to beneficiaries. Where a decedent fails to establish such documents while alive, State law and the probate courts will dictate how the estate is administered and to whom assets get distributed to.

Probate With a Will 

A deceased person with a Will is known as a testator and he or she is deemed to have died “testate.” When a testator dies, the person designated as the executor under the Will is responsible for initiating the probate process. The probate process for a testate estate includes distributing the decedent’s assets according to the Will.

Probate Without a Will 

When a person dies without a Will, a person is to have died intestate. An intestate estate can also occur when a written Will is presented to the probate court and the probate court has been deemed the Will to be invalid. The probate process for an intestate estate includes distributing the decedent’s assets according to State law.

What Is The Probate Process?

A probate court proceeding begins with the appointment of an administrator or executor to oversee the estate of the deceased person. Such personal is typically called the “personal representative.”  The personal representative receives all legal claims against the estate and paying off the outstanding debts. Also, the personal representative is tasked with locating any legal heirs of the deceased, including surviving spouses, children, and parents. Then the probate court will assess what assets need to be distributed among the legal heirs and how to distribute them.

Where a personal representative knows that there are outstanding tax liabilities, the personal representative must provide Notice Of Administration to the IRS and applicable State tax agencies which provide instructions for such tax creditor to file a Proof Of a Claim with the probate court.  Where the amounts claimed as outstanding by the tax agencies are incorrect and overstated, the personal representative has the opportunity to dispute such claim which will eventually be heard by the probate court.  Such errors usually occur where the tax agencies did not properly post payments, has yet to process late-filed tax returns or amended tax returns, or the liabilities are based on returns created by the tax agencies and not based on returns filed by the decedent.  It is in the best interest of the personal representative to make sure these tax liabilities are accurate even if it means having the outstanding tax returns prepared or amended income tax returns filed as the failure to cover unpaid taxes from the deceased’s estate is considered to be a breach of fiduciary duty which can impose personal liability on the personal representative.

How Are Outstanding Tax Liabilities Paid?

The collectability of a decedent’s outstanding tax liabilities is typically limited to the value in their estate. Though, there are also situations where a beneficiary may incur tax liabilities for assets he or she receives from the estate such as inheriting real estate owned by the decedent if the personal representative transfers legal title to a beneficiary with unpaid property taxes.

Usually, beneficiaries do not pay income taxes on assets they inherit. There are exceptions regarding retirement accounts, proceeds from life insurance and savings bond interest. Inheritance from an individual retirement account (IRA), 401(k) or 403(b) is taxable if the money was tax deductible at the time the decedent contributed. If there are non-deductible contributions in the account, a portion of the account may be non-taxable. However, a surviving spouse who inherits money from certain retirement accounts of the decedent may roll over the money into their retirement accounts to defer taxes.

Beneficiaries who inherit proceeds from Roth IRAs should not pay taxes on the withdrawals because the contributions made by the decedent were not tax deductible. Furthermore, beneficiaries may not be required to pay taxes on the proceeds that the contributions generate so long as the account is five years old or older.

For life insurance contributions, beneficiaries do not usually pay taxes on the proceeds except on that portion of the proceeds that includes interest. Beneficiaries may also pay taxes if the policy was transferred to them for cash or other valuable consideration. Beneficiaries who inherit savings bonds may pay taxes if the bonds mature and if the beneficiaries redeem the bonds after the original owner deferred the tax. Also, some States have what is called an “inheritance tax” where a beneficiary who inherits from an estate has to pay the State tax on the value that he or she receives. It is the law of the State where the beneficiary resides and not the law where the decedent was domiciled that dictates applicability.

The IRS and any State tax agency can only enforce its claim for unpaid taxes through the decedent’s estate and if the decedent dies without assets or if there are insufficient funds from the estate, those taxes may go unpaid. The IRS cannot transfer the tax liability to another person, except to a surviving spouse when such spouse filed a joint tax return with the decedent, the decedent owed back taxes on a return involving a property they co-owned with the surviving spouse that they filed as married filed separately, or the couple lives in a community property state.

Spouses who believe the IRS or State tax agency is wrongly holding them responsible for their deceased partner’s taxes can apply for innocent spousal relief from the IRS or State tax agency. Innocent spouse relief can protect spouses from paying additional taxes, interest and penalties if the deceased spouse failed to report their income, misreported their income, claimed tax deductions and credits incorrectly, or omitted items on a tax return. Also, a surviving spouse can file a joint tax return for the last year the deceased was alive. Spouses can file as a qualifying widow or widower for two tax years following their spouse’s death if they have a qualifying dependent, which allows surviving spouses to claim standard deductions as a married couple.

How To Determine The Amount Of Back Taxes A Decedent Owes?

For a beneficiary, executor, or administrator to determine the amount of back taxes a decedent potentially owes one must contact the IRS and inform them that you are authorized to receive the decedent’s tax records. This is done by filing a Form 56, Notice Concerning A Fiduciary Relationship. Additionally, a variety of transcripts can be secured from IRS that provides information about the decedent’s previous tax returns and how much they owe.

What Should You Do?

At the Law Offices Of Jeffrey B. Kahn, P.C. we are always thinking of ways that our clients can save on taxes, trusts and estates planning, and probate matters. When there are outstanding tax liabilities or outstanding tax returns, the expertise of a skilled lawyer at the  Law Offices Of Jeffrey B. Kahn, P.C. is needed to help protect the interests of the parties involved. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County (Irvine), Los Angeles and elsewhere in California are highly skilled in handling tax and probate matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income. Also, if you are involved in cannabis, check out what our cannabis tax attorney can do for you. Additionally, if you are involved in cryptocurrency, check out what a bitcoin tax attorney can do for you.

How Can A Creditor Collect From A Decedent’s Estate?

A person who dies owing monies to his or her creditors complicates the administration of the decedent’s estate or trust.  That is because the estate or trust will now be accountable to creditors given that the decedent’s rights, liabilities, assets and interests transfer to their estate when they pass away. Because the resolution of these creditor issues will require the appointment of a personal representative, it is necessary to first open a probate administration.

What is Probate?

Probate is the field of law that determines how an estate must be divided. Each state has its own laws and statutes requirements to determine if and how an estate must be probated. The probate court will supervise the process when a deceased person (a decedent) leaves assets to distribute, such as bank accounts, real estate, and financial investments with or without a will. The probate court provides the final ruling on the division and distribution of assets to beneficiaries.

In many cases, the decedent has established documentation, which contains instructions on how their assets should be distributed after death and designates in such documents who oversees implementing this process.  This involves collecting the deceased’s assets to pay any remaining liabilities on their estate and distributing the assets to beneficiaries. Where a decedent fails to establish such documents while alive, State law and the probate courts will dictate how the estate is administered and to whom assets get distributed to.

Probate With a Will 

A deceased person with a Will is known as a testator and he or she is deemed to have died “testate.” When a testator dies, the person designated as the executor under the Will is responsible for initiating the probate process. The probate process for a testate estate includes distributing the decedent’s assets according to the Will.

Probate Without a Will 

When a person dies without a Will, a person is to have died intestate. An intestate estate can also occur when a written Will is presented to the probate court and the probate court has been deemed the Will to be invalid. The probate process for an intestate estate includes distributing the decedent’s assets according to State law.

What Is The Probate Process?

A probate court proceeding begins with the appointment of an administrator or executor to oversee the estate of the deceased person. Such personal is typically called the “personal representative.”  The personal representative receives all legal claims against the estate and paying off the outstanding debts. Also, the personal representative is tasked with locating any legal heirs of the deceased, including surviving spouses, children, and parents. Then the probate court will assess what assets need to be distributed among the legal heirs and how to distribute them.

Where a personal representative knows that there are outstanding liabilities, the personal representative must provide Notice Of Administration to the creditors which provide instructions for such creditor to file a Proof Of a Claim with the probate court.  Where the amounts claimed as outstanding by the creditors are incorrect and overstated, the personal representative has the opportunity to dispute such claim which will eventually be heard by the probate court.

During the probate process, a creditor’s claim is filed in the probate court for the unpaid debts and liabilities of a decedent. The probate court will hear these claims and decide whether or not these claims should be paid, and how much. Both individuals and entities have the legal right to file claims against an individual even after they have passed away. A creditor may have a claim against a deceased person through an attempt to collect on debts for which the decedent incurred while they were alive, and for which they were legally liable. A creditor may also have a claim from a payment or distribution amount of the decedent’s estate that is promised, but the distribution or payment does not take place.

If an estate does not go through probate, creditors may still be entitled to make claims against inherited property. Inheritors are liable for estate debts up to the value of what they inherited but not all assets that do not pass through probate are available to creditors. For example, life insurance proceeds and retirement accounts are generally not subject to creditor claims.

Ways that a dispute with a creditor can arise during administration of an estate

Types of situations arising from a creditor dispute that involve probate litigation include:

  • A creditor disputing whole or partial disallowance of a claim
  • A creditor disputing the priority of payment
  • A creditor whose claim is disallowed contesting allowance of other creditors’ claims
  • A creditor petitioning the court to allow a claim after expiration of the time limits
  • A petition by a personal representative asking the court to disallow or allow a claim
  • An action seeking to hold a personal representative liable for improperly handling a claim

However, a common and complex dispute that arises in claims brought by creditors has to do with estates becoming insolvent before all of a decedent’s debts have been paid. Creditors can pursue certain non-probated assets (e.g., bank accounts, trust funds) when this occurs. Tracking down non-probated assets can be very complicated, costly, and take a long time. Creditors will have to track down the deceased debtor’s non-probated assets, and, if the beneficiaries don’t agree to voluntarily part with those assets, the creditor may need litigate to compel the repayment of the debt.

Generally, there is no priority among claims within the same class of creditors, except for claims relating to medical and hospital expenses. If a decedent’s debts are greater than the assets of the estate, creditors must be treated equally within each class in the order of priority. When estate assets are insufficient to pay all the debts, some claimants may receive all or partial payment, and some claimants may receive nothing from the estate.

What Should You Do?

Whether you are a creditor looking to enforce payment from an estate or you are the administrator of an estate that is insolvent, consider contacting a skilled lawyer at the  Law Offices Of Jeffrey B. Kahn, P.C. to help protect the interests of the parties involved. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County (Irvine), Los Angeles and elsewhere in California are highly skilled in handling tax and probate matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income. Also, if you are involved in cannabis, check out what our cannabis tax attorney can do for you. Additionally, if you are involved in cryptocurrency, check out what a bitcoin tax attorney can do for you.

Did A California Decedent Fail To Title An Asset Into A Trust And You Are Looking To Avoid Probate? Consider utilizing a Heggstad Petition.

Did A California Decedent Fail To Title An Asset Into A Trust And You Are Looking To Avoid Probate? Consider utilizing a Heggstad Petition.

In the realm of estate management and planning, a Heggstad petition plays a crucial role when a California decedent has neglected to formally transfer their property into their trust prior to passing. This mechanism is particularly significant as it provides a streamlined process to transfer the decedent’s property into the trust without the oftentimes lengthy and cumbersome probate process.

What Is Probate?

Probate is the field of law that determines how an estate must be divided. Each state has its own laws and statutes requirements to determine if and how an estate must be probated. The probate court will supervise the process when a deceased person (a decedent) leaves assets to distribute, such as bank accounts, real estate, and financial investments with or without a will. The probate court provides the final ruling on the division and distribution of assets to beneficiaries.

In many cases, the decedent has established documentation, which contains instructions on how their assets should be distributed after death and designates in such documents who oversees implementing this process.  This involves collecting the deceased’s assets to pay any remaining liabilities on their estate and distributing the assets to beneficiaries. Where a decedent fails to establish such documents while alive, State law and the probate courts will dictate how the estate is administered and to whom assets get distributed to.

Probate With a Will 

A deceased person with a Will is known as a testator and he or she is deemed to have died “testate.” When a testator dies, the person designated as the executor under the Will is responsible for initiating the probate process. The probate process for a testate estate includes distributing the decedent’s assets according to the Will.

Probate Without a Will 

When a person dies without a Will, a person is to have died intestate. An intestate estate can also occur when a written Will is presented to the probate court and the probate court has been deemed the Will to be invalid. The probate process for an intestate estate includes distributing the decedent’s assets according to State law.

What Is The Probate Process?

A probate court proceeding begins with the appointment of an administrator or executor to oversee the estate of the deceased person. Such personal is typically called the “personal representative.”  The personal representative receives all legal claims against the estate and paying off the outstanding debts. Also, the personal representative is tasked with locating any legal heirs of the deceased, including surviving spouses, children, and parents. Then the probate court will assess what assets need to be distributed among the legal heirs and how to distribute them.

The probate process can take a long time to finalize and can become costly, therefore it is important to know whether a probate is required following the death of an individual. The more complex or contested the estate is the more time it will take to settle and distribute the assets. Furthermore, the proceedings of probate court are publicly recorded so avoiding probate would ensure that all settlements are done privately.

Utilizing A Heggstad Petition.

After a decedent dies and it is determined that there is an asset or group of assets that were intended to be placed in a trust while the decedent was alive but in fact such assets were never titled in the trust, utilizing a Heggstad Petition may be the way to go to avoid a full-blown probate administration.

Originating from the California court case, Estate of Heggstad, this legal petition offers a testament to the intention of the deceased, allowing a trust to serve its intended purpose — minimizing estate taxes, avoiding probate, and ensuring a smooth transition of assets to the beneficiaries.

California Probate Code 850 is where the ruling of the case of the Estate of Heggstad is codified.  It allows the option of skipping the expensive and long task of probate by using a Heggstad petition in California. If a Heggstad petition is successful and the probate court agrees there is sufficient evidence that the asset or property was to be part of the trust, then the petitioner (usually a trustee successor of the trust) will receive a court order verifying that the property or asset is indeed a part of the decedent’s trust. A piece of property may be excluded from a trust for several reasons such as, extenuating circumstances that prevented the decedent from transferring the property, decedent passed away before transfer or property was completed, property was taken out of the trust for a limited time and never put back in the decedent’s trust, a decedent thought the property was transferred but there was a mistake or oversight in the documentation,  the decedent forgot to transfer the property, or the decedent did not know how to properly transfer to the decedent’s trust.

Usually, the process of securing an Order from the probate court after filing of a Heggstad petition takes between 2 and 4 months, which is a much shorter timeline than the probate court’s timeline of 18 to 24 months on average. In order for a Heggstad petition to be approved certain documents and evidence should be gathered to be submitted. Documents needed include a copy of the living trust, schedule of assets for the living trust, property deed(s), information about the decedent, heirs, and beneficiaries. Furthermore, evidence proving that the decedent’s original intent was to include the asset or property in the trust is necessary to having a Heggstad petition approved and successful in court. A Heggstad petition is a great alternative to going through a full-blown probate to deal with a situation where assets or property were not included in a decedent’s trust.

What Should You Do?

Legal professionals frequently advise the thorough completion of trust funding to obviate the need for a Heggstad petition; however, it remains an invaluable tool for trustees and beneficiaries alike when facing the challenges posed by incomplete estate plans. It underscores the critical importance of meticulous estate planning and the invaluable safeguard a well-drafted Heggstad petition can serve as against the unpredictability of probate proceedings, thus ensuring that the decedent’s wishes are honored and the beneficiaries are protected.

Consider reaching out to a Trusts and Estates and/or Probate Attorney such as those at the Law Offices Of Jeffrey B. Kahn, P.C. We are always thinking of ways that our clients can save on taxes, trusts and estates planning, and probate matters. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County (Irvine), Los Angeles and elsewhere in California are highly skilled in handling tax and probate matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income. Also, if you are involved in cannabis, check out what our cannabis tax attorney can do for you. Additionally, if you are involved in cryptocurrency, check out what a bitcoin tax attorney can do for you.

What is Probate?

What is Probate?

Probate is the field of law that determines how an estate must be divided. Each state has its own laws and statutes requirements to determine if and how an estate must be probated. The probate court will supervise the process when a deceased person (a decedent) leaves assets to distribute, such as bank accounts, real estate, and financial investments with or without a will. The probate court provides the final ruling on the division and distribution of assets to beneficiaries.

In many cases, the decedent has established documentation, which contains instructions on how their assets should be distributed after death and designates in such documents who oversees implementing this process.  This involves collecting the deceased’s assets to pay any remaining liabilities on their estate and distributing the assets to beneficiaries. Where a decedent fails to establish such documents while alive, State law and the probate courts will dictate how the estate is administered and to whom assets get distributed to.

Probate With a Will 

A deceased person with a Will is known as a testator and he or she is deemed to have died “testate.” When a testator dies, the person designated as the executor under the Will is responsible for initiating the probate process. The probate process for a testate estate includes distributing the decedent’s assets according to the Will.

Probate Without a Will 

When a person dies without a Will, a person is to have died intestate. An intestate estate can also occur when a written Will is presented to the probate court and the probate court has been deemed the Will to be invalid. The probate process for an intestate estate includes distributing the decedent’s assets according to State law.

What Is The Probate Process?

A probate court proceeding begins with the appointment of an administrator or executor to oversee the estate of the deceased person. Such personal is typically called the “personal representative.”  The personal representative receives all legal claims against the estate and paying off the outstanding debts. Also, the personal representative is tasked with locating any legal heirs of the deceased, including surviving spouses, children, and parents. Then the probate court will assess what assets need to be distributed among the legal heirs and how to distribute them.

The probate process can take a long time to finalize and can become costly, therefore it is important to know whether a probate is required following the death of an individual. The more complex or contested the estate is the more time it will take to settle and distribute the assets. Furthermore, the proceedings of probate court are publicly recorded so avoiding probate would ensure that all settlements are done privately.

Bypassing Probate

If an estate is small enough to bypass the probate process, then the estate’s asset may be claimed using alternative legal actions, such as an affidavit. Also, some assets can bypass probate because beneficiaries have been initiated through contractual terms, such as pension plans, life insurance proceeds, 401 k plans, medical savings accounts, trusts, living trusts, and individual retirement accounts (IRA) that have designated beneficiaries. Furthermore, probate court can be bypassed if assets are jointly owned with a right of survivorship and also if a deceased person’s debts exceed their assets.

What Should You Do?

The probate process could be expensive and complex especially during a time of grief. Consider reaching out to a Trusts and Estates and/or Probate Attorney such as those at the Law Offices Of Jeffrey B. Kahn, P.C. We are always thinking of ways that our clients can save on taxes, trusts and estates planning, and probate matters. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County (Irvine), Los Angeles and elsewhere in California are highly skilled in handling tax and probate matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income. Also, if you are involved in cannabis, check out what our cannabis tax attorney can do for you. Additionally, if you are involved in cryptocurrency, check out what a bitcoin tax attorney can do for you.

How An Heir Or Beneficiary Can Contest A Will In Probate Court

How An Heir Or Beneficiary Can Contest A Will In Probate Court

Probate is the field of law that determines how an estate must be divided. Each state has its own laws and statutes requirements to determine if and how an estate must be probated. The probate court will supervise the process when a deceased person (a decedent) leaves assets to distribute, such as bank accounts, real estate, and financial investments with or without a will. The probate court provides the final ruling on the division and distribution of assets to beneficiaries.

In many cases, the decedent has established documentation, which contains instructions on how their assets should be distributed after death and designates in such documents who oversees implementing this process.  This involves collecting the deceased’s assets to pay any remaining liabilities on their estate and distributing the assets to beneficiaries. Where a decedent fails to establish such documents while alive, State law and the probate courts will dictate how the estate is administered and to whom assets get distributed to.

Probate With a Will 

A deceased person with a Will is known as a testator and he or she is deemed to have died “testate.” When a testator dies, the person designated as the executor under the Will is responsible for initiating the probate process. The probate process for a testate estate includes distributing the decedent’s assets according to the Will.

Probate Without a Will 

When a person dies without a Will, a person is to have died intestate. An intestate estate can also occur when a written Will is presented to the probate court and the probate court has been deemed the Will to be invalid. The probate process for an intestate estate includes distributing the decedent’s assets according to State law.

What Is The Probate Process?

A probate court proceeding begins with the appointment of an administrator or executor to oversee the estate of the deceased person. Such personal is typically called the “personal representative.”  The personal representative receives all legal claims against the estate and paying off the outstanding debts. Also, the personal representative is tasked with locating any legal heirs of the deceased, including surviving spouses, children, and parents. Then the probate court will assess what assets need to be distributed among the legal heirs and how to distribute them.

The probate process can take a long time to finalize and can become costly, therefore it is important to know whether a probate is required following the death of an individual. The more complex or contested the estate is the more time it will take to settle and distribute the assets. Furthermore, the proceedings of probate court are publicly recorded so avoiding probate would ensure that all settlements are done privately.

When Can An Heir Or Beneficiary Contest the Will?

Once a Will is filed with the probate court, an heir of the filed Will or an heir listed in another version of a Will executed by the testator has the ability to file a dispute or as we call “contested”. They may do so if they believe the filed Will is not truthfully representative of the decedent’s wishes.

There are several instances where a filed Will can be contested, including:

  • Undue Influence: When a testator was incapacitated, elderly, or otherwise vulnerable, a beneficiary may have grounds to contest a Will. A Will may be contested if the beneficiary suspects the testator was taken advantage of while drafting the Will.
  • Mental Capacity: If a beneficiary believes the testator was not of sound mind due to illness, substance abuse, or a mental health disorder, they can contest a Will. Proof that the testator had the capacity to create a legally binding document must be provided for the Will to stand.
  • Provision Violation: In California, a Will must be signed by the testator in front of two witnesses who also sign the document. Neither witness is allowed to be named as a beneficiary in the Will. If any of these conditions are violated, the validity of a Will can be called into question.
  • Multiple Versions of a Will: There are cases when a testator has drafted more than one Will to update their estate plan. Most often, the probate court considers the new document as the legal document, and the old document is deemed invalid.
  • Non-compliance with legal formalities: In California a Will must be in writing, signed by the testator, and signed by two witnesses. Failure to meet all of these requirements can lead to legal issues during the probate process.
  • Beneficiaries who may be missing or uncooperative: California has specific notice procedures that must be followed for beneficiaries who are missing or are uncooperative in the probate process.

Depending on what has taken place already with the probate court will dictate how much time an heir or beneficiary has to contest a Will.  If this is something you are considering, you should reach out to counsel as soon as possible to make sure you do not miss any deadline to file a Will contest.

What Should You Do?

Consider reaching out to a Trusts and Estates and/or Probate Attorney such as those at the Law Offices Of Jeffrey B. Kahn, P.C. We are always thinking of ways that our clients can save on taxes, trusts and estates planning, and probate matters. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County (Irvine), Los Angeles and elsewhere in California are highly skilled in handling tax and probate matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income. Also, if you are involved in cannabis, check out what our cannabis tax attorney can do for you. Additionally, if you are involved in cryptocurrency, check out what a bitcoin tax attorney can do for you.