California offers an alternative process to probate proceedings for small estates. If the estate falls under the legal threshold, then it is considered a small estate that may not need to go through the probate process.
Does that mean that you no longer need a probate attorney?
Some consider the affidavit approach for small estates as a Do-It-Yourself approach to settling an estate. Mostly using forms, the necessity of a formal court process is dispensed with, and therefore many people think they can save on costs even more if they dispense with the assistance of an attorney.
The Risks of the DIY Approach
Going DIY on settling an estate is an understandable, and for many, a logical choice. If the estate is small enough that, after settling costs, debts and liabilities, there won’t be a lot left for the successors, there certainly would be much less to pay for an attorney.
But going DIY also comes with its own risks.
Transferring real property
There are two options for transferring real property outside of probate: one can either file a Petition to Determine Succession to Real Property, or one can execute an Affidavit re Real Property of Small Value.
Both forms require an official Inventory and Appraisal from a probate referee, as well as a minimum waiting period of 6 months.
The Petition to Determine Succession to Real Property would also still need to go through court proceedings.
Both options of transferring real property require a good understanding of the applicable legal rules and the necessary supporting documentation and evidence to justify the transfer of real property. Notices must be given. And should the affidavit or the petition be declined, an understanding of what steps to take next would also be helpful.
This would not be probate work per se, but legal assistance from a qualified professional might still prove indispensable. And the cost of that assistance would, in some instances, even be cheaper than the costs of mistakes and errors that eventually would need to be rectified.
The Trap of Personal Liability
One important thing that successors to an estate opting to DIY the transfers of small estates is what happens to the decedent’s debts and liabilities.
In traditional probate, the estate is the sum of both the assets and liabilities of the decedent. So if the decedent left debts and liabilities that need to be paid off, these would be paid from the estate assets.
For a small estate, using the affidavit method to fast track the transfer of assets to successors means that the successors will also be “inheriting” the decedent’s debts and liabilities – to the extent of the value of the property transferred.
So if a child of the decedent successfully transferred the decedent’s bank account to their name, say for a cash value of $50,000, this means that creditors can go after the successor up to the maximum amount of $50,000.
Since the account has already been transferred to the name of the successor, that liability then becomes their personal liability.
Should this happen, the services of an attorney can be crucial. A good probate attorney can help the successor determine which debts are valid and authentic, and of those, which should be paid out first and in what order.
From a cost-benefit analysis, it is not so difficult to weigh the option of being made liable to pay all claims as opposed to filtering out only those claims which are valid, and at the end of the day, maybe still retaining what remains of the assets.
Protection for the Successors and Fair Distribution
Another potential benefit of retaining the services of an attorney for the transfer of small estates is to ensure that the property is distributed fairly. Sometimes, if a transfer is completed to the benefit of one successor, other successors claiming equal rights to the property of the decedent might dispute the transfer, or sue the transferee directly.
Technically, all successors-in-interest must be party to the Affidavit of Small Estate. That requires a determination of who the legal successors are. Legal assistance at the outset would help ensure that this requirement is met, thereby preventing any further conflicts down the line.
Conclusion
Just because one is not be required to go through a formal probate proceeding does not necessarily mean that one can also quickly dispense with the services of a probate lawyer.
There are still rules, procedures, and applicable laws that apply to small estates, and how they can and should be transferred to successors.
There are still risks that need to be mitigated, and conflict that could be avoided.
Seeking professional guidance is a small price to pay to avoid personal liability and the costs of family litigation.