For small estates, California offers a streamlined option for transferring assets without having to go through a formal probate.
This is facilitated by a Small Estate Affidavit for personal property. If the property in question is real estate, the form to be used is referred to as an Affidavit re Real Property of Small Value.
How does it work?
The Successor’s Right to an Expeditious Transfer
Very briefly, the person presents the affidavit to the person or entity with custody of the property being claimed. It serves as an authorization of sorts to facilitate the transfer of ownership of the property to the heirs even without a full probate.
For instance, if the decedent has a bank account in his name, and the total value of all the properties left by the decedent does not exceed the threshold for small estates in California, the successors or heirs of the decedent can accomplish the small estate affidavit and present it to the bank or financial institution, together with a certified true copy of the death certificate and other identifying documents the bank may require. This should help facilitate the transfer of the funds or property in their possession to the decedent’s successors or heirs.
Take note that the use of the Small Estate Affidavit does come with a few requirements:
- No formal probate has been opened
- The affidavit does not cover real property
- At least 40 days has passed since the death of the decedent
One common challenge to this approach, however, despite its seeming and intended expeditiousness, is when the bank or financial institution refuses to honor the affidavit
Dealing with Institutional Refusal
Sometimes, banks and other financial institutions may decline to honor a Small Estate Affidavit. This is understandable. Financial entities are tasked with safeguarding people’s valuables and they often have strict protocols – especially when it comes to transferring valuable property to persons they don’t have a contractual relationship with.
If the decedent has been banking with a selected institution for years, for instance, and has built up a relationship of trust and familiarity with each other, a stranger coming to the bank, advising them of the death of their client and seeking transfer of their client’s accounts to a third person, the bank would obviously be on high alert. They would need to ensure that they are not exposing themselves to liability.
So even though the successor has complied with all the requirements for a Small Estate Affidavit under Probate Code §13100, the bank may require presentation of additional documentation not required by statute – such as additional affidavit forms, court orders, and other documentation.
This may put the successor in a difficult position. You have complied with all the requirements for the Small Estate Affidavit, and now the bank is seeking additional documentation, or outright refusing to honor the affidavit.
What do you do?
Clear Communications
You will want to speak to a person in authority in the bank or financial institution. If necessary, you may want to speak to their legal department. The bank lawyers will be far more familiar with the legal ramifications of the Small Estate Affidavit.
When speaking with them, you have to ensure that the following are clear to both parties:
The bank is shielded from liability
Under Probate Code §13106, as long as the legal requirements for a Small Estate Affidavit are satisfied, the holder of the decedent’s property (i.e., the bank or financial institution) can rely on the affidavit in good faith and transfer the properties or assets to the successor. The law shields them from liability should there be other potential claimants later on.
“The holder may rely in good faith on the statements in the affidavit or declaration and has no duty to inquire into the truth of any statement in the affidavit or declaration.” – California Probate Code §13106
Refusal of the holder to honor the affidavit entitles the successor to seek court action to compel the transfer
If, despite completing the requirements for a Small Estate Affidavit, the bank or financial institution still refuses to transfer the assets in their possession, the successor is entitled to go to court to bring action against the bank or financial institution, and compel the transfer.
Should the successor need to seek court action, he is also entitled to recover attorney’s fees and costs
The purpose of the small estate affidavit is to facilitate the transfer of small estates without the need of going through a full probate proceeding in court. But if a bank or financial institution declines to honor the small estate affidavit, then the successor has no other choice but to go to court to compel the transfer.
This seeming imbalance will ultimately be addressed by the court itself. If all the requirements for a Small Estate affidavit are shown to have been satisfied, and the bank or other entity’s refusal to honor the affidavit is shown to have no basis, then the court will award reasonable attorney’s fees to the person bringing the action.
“If the holder of the decedent’s property refuses to pay, deliver, or transfer any personal property or evidence thereof to the successor of the decedent within a reasonable time, the successor may recover the property or compel its payment, delivery, or transfer in an action brought for that purpose against the holder of the property. If an action is brought against the holder under this section, the court shall award reasonable attorney’s fees to the person or persons bringing the action if the court finds that the holder of the decedent’s property acted unreasonably in refusing to pay, deliver, or transfer the property to them as required by subdivision (a). – Probate Code §13105(b)
While the award for costs is discretionary, a basic principle is that the prevailing party in an enforcement action is awarded court costs. See (Probate Code §9354(c))
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Ideally, if you are dealing with a small estate, the transfer of the estate assets should be accomplished quickly and efficiently using these “short-cuts” allowed by law. Sometimes, however, there are still challenges for which you may need legal assistance.
If you’d like to ensure your small estate affidavit is fully compliant—or are encountering challenges with enforcement—feel free to reach out to us for guidance.