There can be a lot of confusion when someone passes away. When people call me to tell me about the will or trust mom or dad has left behind, many times they do not know if they have a trust or a will. Many individuals who I speak with use the terms trust and will, as well as trustee, executor and administrator, interchangeably. Trusts and wills are different. However, both are used to distribute assets after a loved one passes away.
A major difference is the process. A trust administration does not require court oversight unless someone such as a beneficiary requests it. If there is a will and a trust, many times a probate is not required. If there is only a will, probate is required. If there are no estate documents, a probate is required.
The main point of an administration of a will or trust is the fiduciary identifies and secures the assets, pays the expenses and distributes the remainder of the assets to the beneficiaries....
While that seems like a simple question, the answer can be complex. The answer depends upon how you have planned and your estate plan, will, trust, account beneficiary designations, etc. There is simply no one answer that answers this question for everyone. It will also depend upon the type of debt, if there were co-signers for your debt and the type of assets and estate that you have upon your passing will determine who gets paid.
Most debts will not attach to your primary residence other than mortgages, taxes, homeowners associations and builder liens. However, the equity in the property may need to be used to pay your unsecured bills. Generally speaking, your estate will be responsible for your debts up to the amount of the value of the estate. This means if your bills are $1,000 and your assets are $600, your estate is only responsible for $600. The remaining $400 will be written off. Your heirs are not responsible for...
A probate administration is the court process to transfer the assets of a decedent to his or her heirs or beneficiaries. The court oversees the transfer through a court supervised proceeding. Before the assets are transferred, a court order authorizing the transfer is required.
Whether or not a probate proceeding is required depends upon what documents, if any, your loved one had and the value of the estate. If the estate plan only consisted of a will, a probate will need to be opened. If no estate plan was done, a probate will need to be opened. If there was a trust and a will, a probate is generally not required.
A simple test to determine whether you need a probate is do you need the decedent’s signature to transfer the assets. For example, your mother had a home when she passed away and the home was held in her name individually. In order to transfer the home, you need your mother’s signature. A probate will be...
In order to be a legal trust, it must have property. Trust property is separated into income property and principal property. Many times a trust will specify who is to receive the income property and a different set of people will receive the principal income. For joint trusts, when the first spouse passes away, the trust can restrict the surviving spouse's ability to access the principal of the trust and limit him to only using the income during his lifetime. The principal is reserved for the children and to be distributed after the death of the second spouse. This is can be in cases where the trust has income producing property such as rental income or generates interest or dividends.
Without any restrictions, the surviving spouse could use the principal and interest as he or she sees fit. The distinction between interest and principal can get muddled at times. Probate Code Section 16320 through 16375 sets forth the guidance...
The current statute governing no-contest clauses contained in Probate Code Section 21310, et. seq. That section significantly limits the effect of a no contest clause. Even if the document contains a no-contest clause, it only can be enforced in three specific scenarios. Those scenarios are:
This only applies if the document you are challenging contains a no-contest clause. The effect of triggering a no contest clause is that you will be disinherited. If you are challenging a will or trust that does not have a no-contest clause, then you will not be subject to disinheritance if you challenge the trust or will and lose.
A direct contest means you are challenging the validity of the trust or will or an...
Many wills and trusts contain a no contest clause. A common no contest clause states if you challenge the terms of the will or trust you will be disinherited. If you believe their deceased loved one was preyed upon and the will or trust does not reflect their true intentions. If you are faced with that situation, it is common to inquire what will happen if you contest the trust. Perhaps you are being discouraged from contesting the trust or will because you are being told you will be disinherited.
It is important to recognize the no contest clause is meaningless if you have been disinherited. If the will or trust gives everything to the person who took advantage of your mother or father, the no contest clause does not matter because you are not inheriting anything under the current will or trust.
The only way you will be able to receive your rightful inheritance is to file a will or trust contest. The no contest clause applies to direct...
When Karin's and John's father passed away, they expected they would inherit their father's estate since they were his only children and he was not married when he passed away. When they located his estate plan, they found that their father left his entire estate to someone who is not family. They were shocked and surprised. Is there a right to inherit from your parents?
Simply put, there is not a right to inherit from anyone. If the decedent executed the estate plan with his or her own free will free of any undue influence and had the capacity to do so, a person can name any beneficiaries he or she chooses. If Karin and John do not do anything, the estate plan is considered valid. In order to set it aside, a petition must be filed in the court to set aside the trust or will. This is called a trust or will contest.
The will or trust contest challenges the will or trust based on undue influence, fraud or lack of capacity. To set aside...
The terminology can be confusing. Many times when I first speak to individuals over the phone, they use the terms interchangeably. Many times the person does not even know whether they are looking at a will or trust. Trustee, administrator and executor all have very different meanings.
A trustee is the person in charge of a trust. An administrator is the person appointed by the probate court to oversee a decedent's estate when there is no will. An executor is the person appointed by the probate court to oversee a decedent's estate when the will has been admitted to probate.
Probate and trust administrations have very different processes. Probate is the process to administer a decedent's estate when there is either no will or there is a will but not a trust. A probate is a formal court supervised proceeding to administer the decedent's estate. Probate is always a requires a formal court proceeding.
The estate of a loved one can be difficult to navigate. This is especially true if your father owed taxes to the Internal Revenue Service. It is not uncommon for the beneficiaries of his estate to feel conflicted. On one hand they want to receive their inheritance. On the other hand they want to do things properly. The conflict becomes real when the beneficiaries realize that if the taxes are paid, they will not receive anything.
Your father's beneficiaries are only entitled to what is left in his estate after the bills and expenses of his estate are paid. No one is "entitled" to inherit from their parent. The good news is your father's creditors, including the Internal Revenue Service, are limited to the assets of his estate. This means that if the taxes are worth more than his estate, the IRS can only look to his estate and the taxes do not need to be paid in full.
This assumes the beneficiaries do not distribute the...
If someone dies and they owe you money, you are a creditor of their estate. If the funds are not secured by real property, such a a mortgage, you have a limited amount of time to take action or you are barred by law from collecting your debt from the decedent's estate.
Under California law, a creditor has one year to bring a file a claim in court against the estate or he/she is forever barred by law from enforcing that debt. Even if a probate is never opened for the decedent, the one year statute of limitation applies.
A creditor can open a probate to file a claim to preserve the creditor's right to sue for the debt. If a creditor fails to file a claim in the probate court within one year of the date of death, the creditor is barred by law from collecting its debt. The statute of limitation applies even if the creditor is not informed the person passed away.
Just two quick steps to make sure you are up to date with the most current information available.