Inventorying the Assets in a Probate Estate

After the Executor has been appointed over the Estate of a Deceased, they have a duty to prepare and file a list of the decedent’s assets as of the date of death with the Probate Court. The list of the decedent’s assets is placed on a Court Form called an Inventory and Appraisal.

The Inventory and Appraisal will include everything owned by the decedent at the date of death, plus everything which was owing to the decedent at the time of death (such as unpaid wages, income tax refunds, etc.) The Inventory and Appraisal will be used for tax determination and will be filed with the court to indicate the value of the estate assets.

If the Decedent’s assets need to be valued or appraised, such as real estate or stock, a Probate Referee will be appointed by the court to appraise the rest of the property. The Probate Referee appraises all property in the estate, except for “cash” type items.

The Inventory and Appraisal must be filed with the Court no later than four months after the court issues Letters Testamentary or Letters of Administration.

Creating Flexible Trusts in Uncertain Times

If you decide to make your trust irrevocable, it is important to determine whether you should add provisions that may enable trust modifications in changing times and circumstances.

Things that may demand modification in the future, like trust distribution age, beneficiaries, trustees, and distribution amounts, could lead to regret from not only the grantor but the beneficiaries as well. Additionally, income and estate tax laws are constantly changing, which can create unintended scenarios for those involved. Consequently, several states have enacted statutes to permit the modification of irrevocable trust with tools like decanting, moving assets to various trusts, or allowing grantors and beneficiaries to consent informally to changes.

See Atlantic Trust, Creating Flexible Trusts in Uncertain Times, Wealth Management, July 1, 2016.

Funding Your Living Trust

You’re not done when you’ve signed your trust document.

Once you’ve made a living trust, there’s one more crucial step: formally transferring assets to the trust. This is called “funding the trust”—and if you don’t do it, your trust will have no effect on how your property is transferred after your death. If your trust is not funded at death, then your assets will pass through Probate, which is very costly and time consuming.

It’s very common for people to skip the funding step altogether, or to leave out valuable assets. Many people assume, if they hired a lawyer to draft the trust document, that the lawyer will also take care of the funding. But that’s not always the case, so be sure to check with the lawyer and be clear about your responsibilities. Read More about Trust Funding at

What CPAs Should Know About Trusts

From: Accounting Today
MARCH 2, 2016

“Many estate planners recommend that clients create trusts for various reasons, but problems can arise when the trustee is a family member who has no experience regarding the responsibilities of a trustee.

In many cases the trustee selected by the creator of the trust is not capable of handling the responsibilities that are involved in administering a trust. The trustee should always engage a qualified CPA to assist in administering the trust.

The trustee is subject to a number of obligations, including maintaining adequate records, making investment decisions, reading and interpreting the provisions of the trust document, making sure the annual fiduciary income tax returns are filed in a timely manner, and making distributions in accordance with the terms of the trust.”

Continue reading the article: What CPAs Should Know About Trusts

Estate Administration: Small Estate Affidavit (Prob. Code 13100)

An estate under $150,000 in value is not required to pass through probate. Rather, there is a procedure where the heirs sign a Declaration of Small Estate or Small Estate Affidavit, which they can deliver with a death certificate to a bank or broker. The institution can then transfer the assets to the heirs.

California established this procedure for small estates to avoid an expenses and lengthy probate. The $150,000 calculation does not include accounts held in joint tenancy, trust assets, 401k’s and IRA’s, Life Insurance, Pay on Death (POD) accounts, or other accounts with named beneficiaries.

If the estate is under the $150,000 amount, the heirs are not required to open a probate estate or obtain Letters. Simply providing the institution with the Small Estate Affidavit is sufficient for them to transfer the funds.

Some institutions may be reluctant to accept this form and insist on an Executor obtaining Letters through a formal probate. An experienced attorney may be able to assist with instructing the institution to release the funds and prevent an unnecessary expenses or delays.

How to Handle a Reverse Mortgage in Probate

While it’s never easy to deal with the death of a family member, you may not have much time to grieve before handling their affairs, if they had a Reverse Mortgage on their house.

Reverse Mortgages are regulated by the US Department of Housing and Urban Development (HUD). A reverse mortgage is a special type of home loan that lets you convert a portion of the equity in your home into cash. In the event of a death, the servicer of the loan has a right to initiate the foreclosure process in as little as 30 days, unless the beneficiaries or heirs of the estate can provide the servicer with the required information.

Upon learning of the homeowner’s death, the loan servicer will send out a letter letting the heirs know that they have to repay the loan within 30 days
or the servicer will initiate the foreclosure process. Typically, the beneficiaries will be inclined to sell the property to repay the loan. However, if the house has to pass through probate, it can take as long as 60-90 days from the date of death to have the necessary documents (Letters Testamentary or Letters of Administration) and authority to sell the house.

The servicer of the Reverse Mortgage has the option to extend the 30-day
deadline to initiate the foreclosure process, but will only do so if the property is being actively marketed. The property can only be marketed if a representative of the estate has been appointed by the court, which can only be done by initiating a Probate of the estate.

It is imperative that the beneficiaries of an estate with a reverse mortgage on the home contact a Probate Attorney in San Diego familiar with Reverse Mortgages to save a property from a foreclosure due to a Reverse Mortgage on a home.

Bond Requirements in a Probate in San Diego

A bond is a form of insurance to replace assets that may be mismanaged or stolen by the estate’s personal representative.

The bond protects the beneficiaries, heirs, and creditors of the estate. The cost of the bond is paid from the assets of the estate.

When an estate goes through Probate in San Diego, the court may require that the personal representative (aka Executor or Administrator) be bonded.
A bond may not be required in all circumstances. The decedent’s will may waive the requirement to the bond or all of the beneficiaries and heirs may waive the bond, in which case the court will not issue a bond. However,
even if the decedent’s will waives the bond or the beneficiaries waive the bond, the court may still require a bond in certain situations, including out‐of‐state representatives.

A new form for Waiver of Bond by Heir or Beneficiary has been issued for a San Diego Probate estate which informs the heirs and beneficiaries the purpose of the bond and the effects of waiving the bond.

A Probate Bond for a Probate in San Diego is another wrinkle in the Probate process that an experienced attorney can assist the personal representative in managing.

2017 Estate and Gift Tax Update

The Estate and Gift Tax law changes for 2017 are not as drastic as previous years. The federal estate tax exemption, an amount that an individual can leave to heirs without having to pay federal estate tax, increased to $5,490,000 and a 40% top federal estate tax rate.

The gift tax annual exclusion amount per donee remains at $14,000 for gifts made by an individual and $28,000 for gifts made by a married couple who agree to “split” their gifts.

The concept of “portability” is still a valuable tool Estate Planners use with spouses. If both you and your spouse die, your surviving spouse can leave $10,980,000 estate tax free without complex estate planning. This is because your $5,490,000 exclusion amount is “portable”, which means that your surviving spouse can use any unused portion of your exclusion amount in addition to the survivor’s own $5,490,000 exclusion amount. In order to get this benefit, an estate tax return must be filed on the first death in order to elect “portability” of your exclusion amount.

Trustee Duties

If you have been nominated and are acting as Trustee, you are acting as a “fiduciary” and have many duties as Trustee. Below is a list of key duties of a Trustee:

  • Duty to identify and locate Trust assets.
  • Duty to control, maintain and preserve Trust property.
  • Duty to keep Trust property separate and identified as Trust property.
  • Duty to maintain confidentiality.
  • Duty to follow the terms of the Trust and the laws governing Trust administration.
  • Duty to exercise the standard of care of a “prudent” person under like circumstances.
  • Duty of loyalty and impartiality.
  • Duty to avoid conflicts of interest.
  • Duty to enforce claims of the Trust and defend claims against the Trust.
  • Duty to act reasonably when exercising any discretion.
  • Duty to account to the beneficiaries.
  • Duty not to delegate improperly.
  • If the Trust provides for CoTrustees:
    • Duty to be sure that all CoTrustees participate in the Trust Administration and
    • Duty to prevent any other CoTrustee from committing a breach of Trust.

See Wayne M. Zell, You Have Been Named as Trustee for a Living Trust‐‐Now What?, The National Law Review, Nov. 20, 2014.

What is a Trust?

A trust is an arrangement involving three parties. You, the “Trustor”, transfer property to a “trustee” who will hold or manage the property for your “beneficary”.

You can setup a revocable trust in which you remain in control of the funds and can even be the trustee. You hold title to your property in your name, as trustee. You can amend or revoke this kind of trust whenever you wish. Revocable Trusts are also called Living Trusts or Inter Vivos Trusts.

The purpose of a revocable trust plan is created primarily to accomplish the following:
1. To provide maximum protection for the surviving spouse
2. To pass along assets to your heirs
3. To avoid probate and its related expenses
4. To avoid a conservatorship proceeding in the event you should lose your capacity to act

Simply having a will does not avoid Probate. You can avoid the expense of probate with a revocable living trust. Remember, proper planning saves money.