In this feature, we examine the administration of trusts and estates in the wake of the holder’s death. Estate planning specialist Laura Nelson-Becker provides insight into the process involved, as well as the critical role performed by lawyers throughout.
For context, in your own jurisdiction, what are the key steps of estate administration following an individual's death?
The procedures of an estate administration in California depend largely upon the nature and extent of a decedent’s assets and whether the decedent had a living trust in place at the time of his or her death. Where there is a living trust, the administration can proceed relatively quickly and privately.
Many people mistakenly believe that a living trust avoids administration completely. However, this is not the case. Although most trust administrations occur outside the court’s supervision, there are still many important administrative tasks that must be completed. The successor trustee must fulfill his or her fiduciary duties to the beneficiaries, which requires some formality.
In a routine trust administration, a trustee can expect to complete tasks such as sending notification and information to beneficiaries, marshaling assets, accounting to beneficiaries, addressing debts, completing required tax filings and distributing or managing trust assets in accordance with the trust instrument. Trustees are entitled to reasonable compensation for their services unless the trust instrument provides otherwise.
A trust administration usually comes with significant cost savings, even if the trustee is represented by legal counsel. I usually recommend that trustees avoid attorneys that charge fees based on a percentage of the value of the trust’s assets – this almost always overcompensates the attorney. Hourly or flat rate billing tends to result in more reasonable attorney fees.
If the decedent died after 1 April 2022 and the estate is a ‘small estate’ with a total value of less than $184,500, simplified procedures apply and no probate is required. Probate is similarly not required to transfer ‘non-probate’ assets such as those held in joint tenancy or those with pay-on-death beneficiary designations.
I usually recommend that trustees avoid attorneys that charge fees based on a percentage of the value of the trust’s assets – this almost always overcompensates the attorney.
Where the value of the decedent’s estate exceeds $184,500 and the decedent does not have a living trust, his or her estate must be probated. This means that the administration of the estate is supervised by the probate court. Even if the decedent had a will, a probate is required. The first step is to petition the court to open a probate administration. Once the initial hearing on the petition is held, the court may appoint a personal representative to administer the estate. The personal representative can expect to inventory and appraise estate assets, manage creditor claims, handle tax returns, account to the court and request court orders on distribution of assets.
A personal representative is entitled to compensation for his or her work in administering an estate. The California Probate Code sets the amount of a personal representative’s compensation, which is a percentage of the value of the estate’s assets. Many personal representatives who are also beneficiaries of an estate will waive compensation since compensation is taxable as income. The Superior Court of California for the County of Santa Clara has a fantastic website detailing the specific steps in a probate administration.
How long can the process be expected to take?
The timeline for administration of a trust and estate vary widely. While a trust administration is usually much quicker (nine months to one year), a probate will require more time. The average probate in California is rumoured to take anywhere from one year to 18 months to complete. With the significant caseloads currently handled by the probate courts, much of the delay is caused by time spent waiting for court availability, and some counties are more impacted than others. Complications may arise with sales of real property, creditor claims and other issues, requiring additional time.
I also find that it is common for self-represented individuals to experience difficulty complying with the technical requirements of a probate administration, setting the timeline for completion back even further. Overlooking even a small procedural technicality may result in a continuance that causes months of additional delay.
Are there any particularly common obstacles associated with estate administration?
The most common issues that I see in my practice result from disputes between family members. These disputes may have their roots in deep family history and dynamics, but usually manifest as legal disputes over property ownership or entitlement to distribution. This could result in contests to the validity of wills and trusts, such as those alleging undue influence or lack of capacity, or lawsuits claiming an ownership interest is estate assets or wrongdoing by fiduciaries.
The most common issues that I see in my practice result from disputes between family members.
How can these best be overcome, or otherwise prepared for before they become an issue?
Proper and thoughtful estate planning is crucial. Drafting attorneys need to have foresight and must have the ability to anticipate the mess of potential issues that may arise in certain situations. For example, where clients intend to disinherit an heir, the drafting attorney should adequately document the client’s intent in a way that helps dissipate the likelihood of litigation in the future.
Certain circumstances should raise red flags for drafting attorneys, such as where an individual appears to be overly involved in an elderly or dependent client’s relationship with the attorney – scheduling and attending meetings, completing forms, paying fees, or otherwise directing the representation. These types of situations are ripe for future issues and drafting attorneys need to be constantly on the lookout so they can react appropriately.
What advice would you give to recently bereaved families who are just beginning the process of organising their loved one's estate?
The most important thing is to take time to grieve. Oftentimes, families get wrapped up in all the legal and administrative tasks that must be handled and become overwhelmed. In most situations, there is no immediate need to act and families can give themselves grace to focus on what is important first (the soonest deadline associated with estate administrations is usually no less than 30 days).
When it is time to move forward with the administration, they should gather together all of the decedent’s legal documents. This will allow them to first determine what type of administration will be required so they will know if the court must be involved.
Why is the assistance of a lawyer a significant benefit under these circumstances?
Lawyers are a critical component of both estate planning and administration. On the planning side, a good lawyer can help establish a thoughtful and complete estate plan, simplifying administration after death. A lawyer can also help navigate the process of estate administration during a very emotionally difficult time. There are many technicalities associated with estate and trust administrations and neglecting these requirements can result in significant delay and cost. Most importantly, trustees and personal representatives have important fiduciary duties and must carry out their obligations with reverence to these duties. Even slight missteps can result in potential liability or unnecessary conflict.
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The lawyer representing a fiduciary ensures that he or she understands their obligations, helping to insulate the client from potential liability. In most cases, a trustee may hire an attorney and pay attorney fees from the trust’s assets. With a probate administration, the Probate Code sets the amount of the attorney compensation, so all attorneys will charge the same amount for ordinary work in an administration. The attorney fee is not due until ordered by the court and is paid at the completion of the probate from the estate assets.
Laura Nelson-Becker
263 Main Street, Placerville, CA 95667, USA
Tel: +1 530-295-6400 | +1 530-617-1692
Fax: +1 530-663-8459
Laura Nelson-Becker is a partner at Becker Nelson Center & James who practices almost exclusively in the field of trusts and estates. She has been certified as a legal specialist in Estate Planning, Trust and Probate Law by the State Bar of California Board of Legal Specialization since 2017. In addition to estate planning and administration matters, Laura regularly handles litigated trust and estate disputes, including will contests, claims against fiduciaries, and property ownership disputes.
Becker Nelson Center & James (BNCJ) provides legal services to individuals and business clients throughout Northern California, handling matters in real estate, business, labour and employment, estate planning and administration, trust and estate litigation, civil litigation, family law and personal injury.
