Q. My father recently died, leaving his home in a Living Trust. He also left several bank and brokerage accounts. Our problem: these financial accounts were never formally transferred into his trust. Is there a way to deal with them now without going through a full probate?
A. Yes, there may very well be a way! And, by the way, your question suggests that you know that a probate is a court proceeding supervised by a judge. It usually requires the assistance of an attorney, involves lots of paper-work and compliance with procedural rules, and typically takes more than a year to complete even where everything proceeds smoothly. In our experience, most families prefer to avoid a probate proceeding whenever possible.
So, in your situation, there may be two options to settle your father’s estate as to the omitted assets without a full probate:
1) Petition Court to Transfer Assets To Trust: One approach would depend upon whether there is written proof that he intended to make these omitted assets part of his trust, but just never got around to doing it. Example: he may have listed these accounts in his description of assets appended to his trust, but perhaps never formally re-titled them into the trust. Some judges may even deem it sufficient if his Last Will, which is usually prepared as a companion document to the “Living Trust”, directs the remaining “residue of his estate” to his Trust, as most such companion Wills actually do.
If so, then it might be possible to Petition the Superior Court for an order transferring them into his trust now, so that they can then be handled – like the home—as part of the administration of his trust and without need for a full probate. The judge hearing this petition would likely make a ruling in one short court hearing. This is sometimes called a “Heggstad” Petition, so named because of the leading court case approving this procedure. However, even this Petition would involve a court proceeding, and require that you engage an attorney to prepare a written petition to the court. So, at best it would involve what I call a “mini- probate”. On the good side, there is no “cap” on the value of assets that may be subject to this Heggstad Petition.
(2) Affidavit Procedure for Accounts Under $184,500: If your father had only omitted from his trust certain bank and brokerage accounts, and if you discover that their combined value does not exceed $184,500 (in year 2024), then you might proceed via the even simpler “Small Estate Affidavit” procedure.
This affidavit procedure, set out in California Probate Code § 13100, requires only the completion of an affidavit by the Successor(s)-In-Interest of your father, setting out the nature of the assets sought to be collected, the right of the Successor(s) to receive them, and certain other recitals. That affidavit would then be delivered to each bank and brokerage firm holding an account for your father, with the request that it comply with the law and turn over the account funds under each custodian’s control to the signer(s). Some banks even have forms for this purpose.
Here, the successor(s) would typically be the named beneficiaries in your father’s Last Will (if he had one), which could very well be the designated Successor Trustee of his Trust. Alternatively, –if there were no Will – then the successors would be his family members who would inherit his estate under the California law of Intestate Succession, i.e. the law which determines rights of inheritance where someone dies without a will. This law designates family members in a certain order of preference.
Of special note is that the values of certain kinds of assets are excluded from the valuation cap when determining whether this Small Estate Affidavit procedure may be used, sometimes making it easier to qualify to use this Affidavit procedure. Also, note that this value cap is adjusted every 3 years based upon inflation. The next adjustment is due in April, 2025.
So, there are, indeed, options for you to avoid a full probate, and you should discuss these with your attorney.