The Small Estate Affidavit is often championed as a fast and efficient way to settle small estates. It is not as costly, cumbersome, or procedurally beset as traditional probate proceedings.
But the Small Estate Affidavit has one tricky vulnerability – it only works when all the successors are in agreement.
And so we come full circle to one of the greatest obstacles to a speedy closing of an estate – whether you are utilizing formal probate proceedings, or the affidavit method for a small estate.
If there is conflict among the heirs and successors, the process is likely to take longer.
If all the heirs and successors cannot agree on a small estate affidavit, even a small estate may be forced to go into probate.
Universal Consent as a Requirement
The pivotal factor here is the answer to the question, “Who is the successor?”
Under Probate Code §13006, the successor of a decedent is defined as: “the sole beneficiary or all of the beneficiaries who succeeded to a particular item of property of the decedent.”
This definition is true whether the decedent died with or without a will
If the decedent left a will, then the successors would be all the beneficiaries named in the will, and who were selected by the decedent to receive his or her assets.
If the decedent did not leave a will, it is considered intestate, and the successors are determined by the laws of intestacy. In California, there is a hierarchy to determine who are the legal heirs, who would now be considered successors.
Now if we bring this back to the small estate affidavit requirements – in case there is more than one successor, for a small affidavit to be effective, all the successors with a right or interest to the property in question must consent to and sign the affidavit.
Typically, when a successor presents a Small Estate Affidavit, the person or entity with custody of the decedent’s property cannot unreasonably decline to honor it, assuming all other legal requirements are met.
But if a bank, for instance, that holds the decedent’s account, is in receipt of competing small estate affidavits from different competing successors, then the bank will be perfectly placed to decline to honor all the affidavits.
In the face of competing claims, or in the absence of universal consent among all the successors to a small estate affidavit, even a small estate that falls well below the threshold would have no other alternative but to go to probate.
Successor Liability for Leaving Out a Name
Because small estate affidavits are generally carried out by the successors to take possession of estate assets outside of court, there is no court supervision to ensure fair play. Sometimes this can create a dilemma whereby a few successors make use of the affidavit method to transfer property to themselves and intentionally leave out others.
But the successor who was left out is not without legal remedies, which are set out in Probate Code §13110:
Personal liability of the person to whom property was transferred
Under Probate Code §13110(a), a person to whom property has been transferred is considered personally liable to the person with a superior right to the transferred property.
This liability includes the fair market value of the property at the time of presentation of the affidavit, any income received from that property, and if the property has been sold, interest on the fair market value of the property.
If the transfer was made fraudulently, treble the fair market value
If the person who presented the affidavit and successfully transferred the property to their name excluded another person with a superior right to that property, and he did so knowingly and with the intent to defraud that person, then the transferee may be held liable to three times the fair market value of the property transferred.
Restitution if probate is opened
Should a formal probate be opened later on for the decedent’s estate, the personal representative may require the transferee to restore the property to the estate, or its value, plus interest.
Three Years Statute of Limitations
As with all things, when it comes to asserting your rights as a successor, you can’t just sit on your hands and do nothing. The courts expect you to act in a timely manner.
If you would like to challenge a transfer made pursuant to a small estate affidavit, you only have three years to do so. This is three years from either: the date the affidavit was presented to the person or entity with custody of the decedent’s property, or three years after the discovery of the fraud, whichever is later.
Sometimes Probate is the Only Option
While the affidavit method is presented as an inexpensive and efficient manner of dealing with a small estate, when there are multiple successors with conflicting interests, this may not be the most feasible option. And to try to force an affidavit through will either only prolong the matter, or expose the active successors to potential liability.
A family dispute over property is never good, and often not easily settled. Sometimes the best alternative is to seek the neutrality of a probate judge and the safeguards of a probate proceeding. In such cases, the only viable path is probate, and the assistance of a probate attorney becomes indispensable.
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If you are dealing with successor disputes over property, or are unable to secure universal consent to your small estate affidavit, it is highly recommended that you seek the assistance of a probate attorney who can guide you through your legal options.