If you have the question, “Can I sign over my inheritance to someone else?” in your mind, you’re at the right place! It’s indeed an important question, as a lot of people want to donate their wealth to organizations or gift it to a friend, family member, or someone who’s not a blood relative. 

Good for you that this guide is here to help you out! This guide is all about the laws of inheritance in the USA, how you can transfer your inheritance, its type, and how you can sign over your inheritance to someone else. 

We’ve devised a step-by-step guide in simple points that explain the entire process of inheritance transfer along with how much this process costs. So be with us till the end of our guide and learn the safest way to sign your wealth to a responsible person. 

Can I Sign Over My Inheritance To Someone Else? An Overview

The short and simple answer is YES! You can transfer the inheritance to someone else, but remember to do this: you need the ownership. First, you must legally inherit the inheritance; transferring it becomes entirely yours once it’s in your name.

Many individuals don’t want to inherit the property due to tax or personal reasons. In this case, you’re free to give up on the inheritance. The only necessary step you need to take is renouncing the inheritance. 

In legal terms, renouncing an inheritance means formally declining to accept it. For this, hire an attorney in your state. Consult everything with him about the jurisdiction’s specific laws, and then you can renounce the inheritances. 

However, you must know that in case of renunciation, everything will go back to the legal beneficiaries like children, spouses, siblings, etc. You won’t be able to decide who’ll inherit the inheritance later on. 

Therefore, if you really want someone to inherit everything, you must get the ownership. Afterward, you can give it to anyone with TOD (transfer of death) or as a gift. In both situations, tax implications need to follow. 

Types of Inheritance Transfer In The USA

If you’ve decided to transfer your inheritance to someone else, you should definitely learn about the type of inheritance transfer in the USA. It will help you understand how you can do everything legally. 

  • Transfer On Death (TOD): Transfer on Death is a commonly used method to transfer inheritance in the United States. With TOD, you can choose a specific beneficiary who will inherit the property upon your passing. 
  • Gift Deed: Gift Deed simply means your wish to gift your inheritance to someone while you are alive. This legal document transfers inheritance ownership to the other party when you’re alive. 
  • Joint Ownership: Joint Ownership means you want someone to become a joint owner of your inherited property. This grants them ownership rights and responsibilities just like you. 

Decide how you want to transfer the inheritance. Do you want someone to inherit your wealth after death, in your life as a gift, or want to give someone joint ownership? After deciding, follow the process we’ll explain below. 

Step-By-Step Guide To Transfer Property To Someone Else

Here is the step-by-step guide to transferring property. Before you read further, know that the points below are based on general property transfer rules. The process might be slightly different based on the laws of your state. 

1. Discuss Details of Inheritance With The New Owner 

Before initiating the inheritance transfer process, discuss with the intended new owner. Clarify all legal points, and discuss why you want the transfer, its condition, or the upcoming responsibilities. 

It’s important to ensure the new owner is ready for this responsibility. If the person doesn’t want to inherit the property, you must find someone else who’s up for the responsibility and terms and conditions. 

2. Hire A Professional Attorney

The second vital step is to hire an attorney in your state. After hiring, discuss everything with your attorney in detail, like the situation of your inheritance, who’ll be the next owner, what will be his responsibilities, or any other terms or conditions you want to add. 

The attorney will create the deed as per your requirements. You can also get help from CPT Law and hire our attorney to perform the process for you. We offer free consultations to provide the best service to satisfy the clients in California. 

3. Work Out & Finalize The Deed 

Never leave everything to the attorney; always make sure to check the draft to finalize the deed. Read every detail, your and the new owner’s information like name, address, and all the rules and regulations. 

If any changes are needed, make them on time. Then, notarize the deed with the signatures of a notary. It’s an important step; without a notary, you can’t verify the deed, nor will it have any legal value. Here are a few rules to become a notary

  • Be present during the notarization process.
  • Must be over the age of 18.
  • Mentally competent to sign and understand the documents.
  • Must have proof of identity.
  • Show no signs of signing under duress.

4. Record The Deed – Final Step

After the deed is finalized, inform relevant parties of the inheritance transfer, including utility companies, homeowners, or anyone associated with the property. Take the deed to the local government office to complete the inheritance transfer process. 

Note: Ensure inheritance tax records are updated with the new owner’s information to prevent any issues. The tax depends on the state you live in and have the inheritance. 

How Much Does A Deed Transfer Cost?

The cost of the deed transfer depends on various factors like the state you live in, your inheritance, tax and so forth. However, in general, this process usually takes $150 to $1000 or even more. 

Everything depends on the fee, taxes of your state and also the fee of the attorney. The bigger your inheritance is, the more you have to pay taxes and the attorney fee. So to get the right answer, contact the attorney and local govt office about fees and taxes. 

Conclusion

If we sum up the entire answer, can I sign over my inheritance to someone else? It would be yes, you can, but there are some rules and regulations. You must be the owner of the inheritance and then choose whether you want to give the inheritance. 

There are three main ways to transfer the inheritance: as a gift, transfer on death (TOD), and joint ownership. You can choose how you want to transfer the inheritance; each transfer method has its pros and cons, so make sure to discuss everything with your attorney. 

Dustin Macfarlane discusses the outcome of the famous pop singer’s (Prince) estate and how much money his heirs will not be receiving because he didn’t have an estate plan. He will dive into how a simple estate plan could have protected the singer’s money and provided a much larger inheritance.

Full Transcript from California Probate and Trust’s September 09, 2022 Podcast Episode 13 – Prince’s Estate & Probate

Hello, and welcome. You’re listening to Legally Speaking Podcast and Radio Show. My name is Dustin McFarland, and I own California Probate and Trust. We’re a law firm dedicated exclusively to helping California families protect their assets, avoid family drama, and eliminate government interference. If you are concerned about what’s going to happen to you and your affairs, your stuff, your money, your assets when you pass away, give me a call today. The number is (866) 674-1130. Again, (866) 674-1130. Prince Rogers Nelson, born June 7th, 1948, died April 21st, 2016. Prince died six years ago. 2016, he passed away. And just this week, we got the news that they are finalizing his probate estate, finalizing the probate, distributing the assets. So, what is probate, and why does it take so long? And why do we even have it? And oddly, not every state has probate, or every state has probates. Some states are really, really simple, very, very little government involvement.

And then apparently when… Obviously California, it’s all government all the time, and government wants to be heavily involved. It looks like Minnesota, because there was a contest, meaning because people were arguing over who got what and what percentage, the government does get involved. And essentially, everybody suing each other, which is just horrible for a family to go through. So in Prince’s case, his estate was probably larger than most of our estates. His estate was a hundred… It was finalized at $156 million. That’s a number they settled on. It’s important because it’ll tell how they… First, it’ll tell how much taxes owed. So, that’s a big number. And so the IRS had its fingers in this too, because if the estate was valued at a higher number, and the IRS gets 40% of it, that’s more money to the federal coffers, and they liked that.

So, this was a six year battle trying to figure out how to divide Prince’s estate. So, why was Prince in probate? Prince was in probate, and just like all of us would wind up in probate if we die intestate. Intestate means that we die without a will. Prince did nothing, no will, no trust, no… He put forth no effort to direct or give instructions to anyone regarding his estate upon his passing, nothing. He left it up to the state law and state legislators. And every state has its own set of rules built into their state law called in test state succession. Intestate succession is just the state default distribution plan if you die without a will or without a trust. And it really then is dependent on your family and how they’re related, and what generation they are, and when you receive the money, and if there are any other co-owners, and it’s just this big kind of convoluted mess.

When we explain this to people, they almost can’t wrap their head around it sometimes because the state just has its own way to do it. There’s not many laws that you can just modify on your own. And this is one of the real… If you remember nothing else from our conversation today, remember this, estate planning, and really intestate succession, this is the one area of law that you can just modify the law and change it how you want it to be. I wish we could do that with the tax code or with the speed limit. That would be awesome. I would modify it to say I could go a hundred miles an hour, but this is the only area of law that you can really just say, “You know what? I don’t want to do the default in test state succession. I have my own ideas about my family or about charities or churches,” or however you want to your estate to be divided up.

You can divide it. We can all divide it for ourselves. You can divide up your estate and lay out that distribution plan upon your passing however you want. No one really can interfere with that. The only time intestate succession comes into play is when you do nothing, when you have no involvement, you don’t write down on a napkin what you want to have happen. You just completely leave it up to the government, and that’s exactly what happened to Prince. He passed away. And so there were people who said, “Hey, I have a contractual interest in this estate. It should go to the company, the music company.” And other family members, these half siblings said, “No, we have an intestate succession right to the estate. It should go to us, the family.”

And then the IRS gets to step in and says, “Well, you guys are all cute, but we have a right to 40% of anything in excess of three and a half million dollars that is coming to us.” And so the IRS will get paid its 40% of, essentially $150 million. That goes. There is no question. The attorneys, they obviously get paid. Anytime we’re in court, know that the attorneys are getting paid. And so that is definitely going to happen. That’ll be several million dollars. The trustee or the executor, that’ll be several million. So, let’s talk about these players and how this kind works, and again, why it’s there, and most importantly, what you can do to avoid this.

So, intestate succession. In California, intestate succession is the plan, the default distribution plan for your assets. It’s different based on whether or not you’re married or whether or not you have children, whether or not you have siblings or parents or grandparents. It really is unique to you. And the biggest ones that we see are individuals who are not married and they pass away, and they have children. And if they die intestate, meaning without a will, then the state says, if you’re not married… And there’s even some caveats on that, if you were married and when your spouse died and how you received the property, but we won’t go into the technical details. Just know that there’s an asterisk on this example. But like Prince, not married, so it’s going to go to children. Well, Prince didn’t have any children. So then it’s going to go up to parents.

Well, his parents were deceased. So, then we’re going to go back down to his siblings. And that’s kind of where it settled, is the six half siblings. And I don’t care if they’re half siblings. If the state law says that they’re treated as full-blooded siblings, then that’s just how they’re going to be treated. It just doesn’t matter. So, the state law said that it goes to spouses. Well, Prince wasn’t married, so no spouse. It goes to children. Prince didn’t have any children. So, then where do we go? We go to parents. Both of his parents died before him, so it doesn’t go to parents. It goes to… Then we go… And if you can imagine it like a tree. We go down… Well, we go across to spouse and down to children. When we run into a dead end, we turn around and we go back up to parents.

If parents are deceased, we go out to siblings, brothers and sisters. And then that can include not only half siblings, but also adopted siblings. Again, every state is a little different, but California is going to include adopted and half siblings. And sometimes, it depends on the parents… Generally, it’s not step siblings, but I guess it depends on which parent is alive or deceased. And then we’re going to go down to siblings. And so Prince had these half siblings that are going to get their intestate share of the estate. The problem is that there’s also this record company. And the record company says, “Oh, hold on, hold on. We have a contractual interest. We gave Prince money. In return, he gave us rights, whether it’s royalty or whatever royalties to own some of the intellectual properties, some of the music, the albums, the creations that Prince came up with.”

And so this company and the family had been fighting for six years trying to figure out who gets what. And so essentially, and they’re probably all unhappy about this, but that’s just how the courts work. Essentially, half of the estate will go to… So first of all, 40% of the estate will go to the IRS. A lot of people are worried about the estate tax. CNN calls it the estate tax or the wealth tax. Fox News calls it the death tax. It’s all hyperbole. Really, it’s anything over, at that time, when Prince died, it was three and a half million dollars, is going to be taxed at 40%. Right now, these numbers are higher, but back then in 2016, it was three and a half million. So, you figure on $156 million estate, like $153 million is going to be taxed at 40%. All that’s going to go straight to the IRS, so they’ve got to come up with ways to finance that. And that’s, again, difficult because this estate is not a liquid estate.

It’s not like there’s $156,000 in cash sitting there. That would’ve been easy. It’s not like there’s $156,000 of real estate sitting there. That would’ve been easier. We’re talking about rights, ownership rights, royalty rights, owning intellectual property in all of the music. And valuing that and knowing how to get money out of that is what’s difficult. So, they’ve got to come up with ways to sell, and well, to value, which it took six years, and then divide, and now liquidate. They’re going to have to pay the IRS this estate tax, which they can’t avoid. It’s coming. But know this, know that most people don’t have enough wealth to qualify for this estate tax. Right now, it’s $12 million per person. Back when Prince died, it was three and a half million dollars per person. We don’t need to worry about the estate tax, but the probate court is going to make sure that the IRS gets paid first.

Then the probate court is going to make sure that the lawyers get paid. Then the probate court is… So, every time you have a… So, let’s talk about probate and who the players are. So number one, we always know that the government is involved. So, there’s the state court that’s involved. And a lot of times, we have to pay a little bit of nominal money to the state court. That’s just kind of peanuts in this case. We have to… If there’s any taxation, we know that the IRS or the estate or any other tax agency is going to have their fingers in the cookie jar. They’re going to be involved. Every estate that, not state, but E-S-T-A-T-E, every time we go to probate, there needs to be one person, or probably in this case, a company, who is in charge of managing and holding onto and preserving and ultimately paying checks and distributing the estate. That person is called the personal representative, the administrator, or the executor. If you do your will, we call it the executor.

But if you don’t have a will, California calls it, kind of depending on the circumstances, either an administrator or a personal representative. There’s always a personal representative. There’s always an administrator of the estate. And you think, well, why does there have to be a person? Think about this. There literally has to be a person to sign the deed, to sign a listing agreement to sell your house. There literally has to be a person who can get in the car, drive to the bank, withdraw the money, write the checks, and send it to the beneficiaries. There literally has to be a human being that hires the lawyer, that goes to court, that talks to the judge. There has to be a human. So, every single time somebody dies, there is at least one person involved in shutting down and gathering the assets, paying your bills, paying your taxes, distributing your assets, and then shutting down the probate case. There has to be a human to do that. And we pay these people. We pay them handsomely, in fact. They get a percentage of the estate.

So in this case, in Prince’s case, the administrator of the estate, and it’s a company, but the administrator of the estate is getting about $3 million. Not a bad gig if you can get it. I mean it’s four, six years of work, but I don’t know, $500,000 a year for six years, that’s not a bad day at the office. So, there’s always an administrator. We would much rather have an administrator that you choose instead of one appointed by the court. If you die without a will, that person’s going to be appointed by the court. And you may not know. They don’t really care. The ones that are appointed by the court, they are not emotionally attached to anything. They will sell anything. It does not matter to them.

It is just stuff. And there is no sentimental value, no heirlooms, no emotional interest, no nothing. It’s like, let’s just sell it, distribute it, and move on. And so that’s what administrators and executors do. If you have your own will, you can decide who’s in charge. Well, Prince didn’t do a will, so the court appointed a company to be the administrator of the estate. No administrator’s going to act alone, so every single administrator hires a lawyer, and the lawyers are going to get paid. Here in California, the administrator and the lawyer get paid the exact same amount of money. So, everyone says, “Oh, the lawyers, they just rape you on the estate. They get paid so much money.” Well, guess what? They don’t get any more money than the administrator. And probably, in most cases, the lawyer is doing most of the work. So, you can double up.

If, in California, the administrator gets $50,000, the lawyer gets 50,000. In California, if the administrator gets paid 100,000, the lawyer gets paid 100,000. It is dead even every time. And in California, there’s a very clear schedule of how to pay administrators and lawyers. It’s super clean. It’s set by state law. And anyway, there’s no arguing. There’s no negotiating, or well, what if, maybe. That’s not how it works. The judge sets the rules and follows the state law and just hands it down from Mount Sinai. Just the rules come down from on high, and there’s nothing you can do but follow the rules. So, you have an administrator. Every administrator has an attorney. And then the other people, they are heirs. So in Prince’s case, there’s a production company. They’re not heir. They have an interest because of a contract.

And I remember reading… I tried to find it for this bit, it’s been, I don’t know, six years. I remember reading initially that that contract was probably a verbal contract between Prince and the production company. Not ideal to have verbal contracts, because no one else knows what the heck you say. So, write stuff down. But he has this contract with his production company. And then you have heirs. Now, a lot of times when we’re talking about wills and trusts, we talk in terms of beneficiaries. Beneficiaries are people we designate. We’re like, “You know what? I designate John and Sue and Jane,” and whatever, specific people. But if you just ignore that responsibility and you decide, “You know what? I’m not doing a will. To hell with it. I’ll just let the government decide who gets what I have,” then you have what are called in testate heirs.

And the government, they don’t even have to guess. They just look at their state law. So in California, they look at the law and they say, “Okay, well these people are alive and these are the family members that you have,” whether you have a spouse or children or parents or siblings or nieces and nephews or whatever. And then they say, “Okay, well, here’s the percentages.” And literally, we can just go down the list and we can divide it up based on percentages. I know exactly… Unless there’s some sort of contest and people are fighting and someone can prove something otherwise, I can calculate, almost to the penny, what fractional interest, what your percentage is going to be of an estate, because it’s all laid out in state law. And what is so surprising is most people don’t really want it to go that way.

They want to take care of their spouse. They want to take care of their kids, maybe one kid more than another. They want to take care of a church or a charity or some cause that they’re behind. Prince didn’t do any of that, nothing. He left it all to just whatever the state law is. And if this was California, and I’m sure it’s very similar in Minnesota, the state looks at the family and they say, “Okay, well first we’re going to look to see if you’re married, and do you have children?” Well, Prince, not married, Prince, no children. So in California, we go to spouse and children first. So, it goes across and down. If you think about that, if you’re kind of mapping out the family, and you and your spouse are on the same line and the children are below, you go across and down at the same time.

Well, that didn’t happen for Prince because he didn’t have a spouse, not married, and no children. And so then we go, “Okay, well let’s go up.” And when I say up, I mean we go to parents. So, we go and look, are Prince’s parents alive at the time that he passed away? And the answer is no. Prince’s parents both deceased. So then we go, “Okay, well, now what do we do? Who inherits this money?” Well, did Prince have any siblings? And the answer is yes. He has six half siblings. So, then we go across, Prince’s same generation, Prince’s same generation, in the same generation, meaning his siblings that are on the same generation. They’re not his nieces and nephews. They’re not his uncle, aunts, and cousins. His siblings all are going to share an equal percentage. Now, it’s like the plot thickens now it’s been six years, and two of these people, two of the six, have also passed away since Prince died.

And that means, if those people didn’t have wills, in fact, I already know there’s going to be two more probates to probate those estates because each one of those shares is going to be worth… I haven’t done the math, but 175 divided by six, 10, 12 million, even if it’s 6 million after the… It’s going to be a significant amount of money. And so there’s going to be two more probates, which is going to be two more lawyers, two more courts, two more executors or administrators of those estates in wherever they lived, and it’s just going to go on and on. People don’t have their act together. And because of that, it just creates more mess and drama and more mess and drama and more mess and drama. It just never ends. So, Prince’s $156 million estate is going to be carved up into these little teeny chunks.

I mean 40% off the top is going to the IRS, and that leaves us with roughly 80 million. I’m kind of doing the math in my head, but roughly $80 million. And then maybe Ryan will do the math and put it up on the screen for me, but 80 million. And then of that, we’re going to split it half to the production company and half to the kids, and that’s 40 million each. And then the kids are going to share it six ways. So, 40 divided by six is just under seven, six and a half to each kid. And each kid is going to take then… And then there’s two of those that are going to be probated again. And if they were… Yeah, so there’s going to be another mess on their hands. It’s like it just…

It’s almost a comedy of errors. And all of this is just so avoidable. You don’t want to be in a probate court, mostly because it just, it’s an open forum to give the world, whether it’s the IRS or creditors or former business partners, it gives everyone the opportunity for their day in court. They can come in and complain and say, “Hey, I was owed money. I should get part of that.” And that happens. I’ve seen shakedowns happen. I’ve seen beneficiaries, “beneficiaries” come in out of the blue, and their strategy was this, makes so much noise that giving them 20 or 50,000 or whatever is faster and cheaper than fighting the truth. And in Prince’s case, there was enough money at stake that everyone was willing to fight. They fought for six years until finally, it was settled on the amount, and it was settled on the percentages, and it was settled on who is going to get what. And so again, the IRS, they’ll get paid first. The administrator will get paid, the lawyer will get paid, and then whatever’s left will be divided up how the court divides it.

And the question is, do you want your family to go through this? Six years, that’s a long time. It’s not the longest I’ve ever heard, but it’s a long time. In California, it’s one year minimum. One year. I mean, if you do it really tight and the court is on point and there’s no delays, you could probably get it down to nine months, 10 months. In a post-COVID world where everything is just delayed just for no apparent reason, just because, it’s probably a year plus. We’re seeing 18 months as normal now. And you think about it, people are depending on that. I mean they shouldn’t, but they are. They’re saying, “Hey, mom passed away. I need to inherit this because we need this money.” It’s like, sorry, the court’s involved. Well, it just has to be sold and given to me. I’m the only child. So? The court’s involved. Nothing that the government does is fast or efficient.

Nothing the government does really goes like this. I mean, if you go to the DMV, you know you’re going to spend some time, If you’ve got to send something to the IRS or send something to any sort of government agency, you know you’re going to spend some time. And you know if you’ve got to go to court, you’ve got a ton of rules to follow, and procedure and timeframes and stuff that you are just so beyond your control. And it’s baked in the system to make sure that taxes are paid and creditors are paid, and everyone has their opportunity to do this. How can this be avoided? The number one way to do this is to just have a trust with all of your assets in your trust. Wills do not avoid probate. Wills really just rewrite the distribution scheme.

A trust allows you to avoid probate. The question is, how important is this to you and really to your children? What impact would this have on your children if they had to wait 18 months and hire an attorney and an executor for $50,000 each? How would that impact your family if they had ended up inheriting a hundred thousand dollars less that went to an executor and to an attorney? How would that impact your family if you passed away and they’re dragged through a court proceeding? Maybe it’s not six year. Maybe it’s three. Maybe it’s one, but it’s still not simple and efficient. It has a negative impact on your kids, a financial impact, a real financial impact. Prince did not care. He didn’t have a spouse or children to protect. He just said, “To hell with it. Whatever. They can fight when I’m dead.”

And that is one approach. I would argue that if you’re married, if you have children, that’s not your approach. No father, no mother has ever said, “To hell with it. Let the kids fend for themselves.” We just don’t do that. We do everything we can to protect our family. Let me know. Give me a call. Let’s talk about how we can make sure your family does not go through the hell that Prince’s family went through. Whether it’s a hundred million dollars or a couple hundred thousand, it is worth protecting and keeping your family out of court. You can reach me at (866) 674-1130. That’s (866) 674-1130. My name is Dustin McFarland. This is all we do. We won’t waste your time. We will take care of you. You will be happy with knowing that your family won’t go through this mess and be strung out in a long, expensive, and unnecessary court proceeding. Keep the government out of your lives and take care of your family. Again, my phone number is (866) 674-1130. Give me a call. I’d love to sit down and talk with you. Have a great day.

When a family member passes away, there are many decisions that need to be made and many emotions to handle. The last thing anyone thinks about is taxes.

Unfortunately, even the deceased can’t escape taxation. If the departed family member earned taxable income during the year in which they died, then federal taxes may be owed. An executor or survivor must, therefore, file a federal income tax return (Form 1040). If you have questions about taxes during the probate process, please feel free to bring this up with your estate planning lawyers who can advise you on tax related issues.

Future Estate Taxes Owed

Similarly, if the deceased individual had a sizable estate or assets that might generate income in the future, the estate may owe taxes. Federal estate tax forms pertaining to the decedent’s estate may need to be filed. (Form 1041, Form 706).

Income Taxes.

The Internal Revenue Service gives you until April 15 of the year following the taxpayer’s death to file a final 1040 form.  If the deceased was married, a surviving spouse has the option to file a final joint federal tax return for the last year in which the deceased lived.

If you file the return online, the IRS provides instructions on all this.  If you are filing a paper return, you must write “Deceased,” the decedent’s name, and the date of death at the top of the 1040 form.  An appointed personal representative and/or surviving spouse must sign this return per IRS guidelines.  If a refund is due, you may need to file a Form 1310 (Statement of Person Claiming Refund Due a Deceased Taxpayer).

Estate Taxes.

If an estate is large enough, Form 706 (the United States Estate Tax Return) is due to the IRS within nine months of the death of the deceased, with a 6-month extension permitted. The individual federal estate tax exemption is currently $11.4 million, so an estate smaller than $11.4 million may not be faced with estate taxes unless the deceased individual made substantial monetary gifts before their passing.

When the decedent’s estate has an executor or administrator (in IRS terminology, an “appointed personal representative”), they must must sign the return for the decedent. For a joint return, the spouse must also sign. Alternately, a survivor of the deceased can file the return.

If an estate generates more than $600 in gross yearly income within 12 months of the taxpayer’s death, it will also be necessary to file Form 1041 (US Income Tax Return for Estates and Trusts), usually by April 15 of the year after the year in which the individual died.  Should 100% of the income-generating assets of the deceased be exempt from probate, the need to file Form 1041 is removed.  Estates required to file Form 1041 should consult a tax professional.

Lastly, there are some cases where expenses paid before death can be deductible.  Under certain circumstances, part of the cost of treating a final illness may be deducted on the deceased’s final tax return.

If you have additional questions about probate, please call or our office to schedule a free consultation with an attorney at our office.

An executor is the person designated in a Will as the individual who is responsible for performing a number of tasks necessary to wind down the decedent’s affairs. Generally, the executor’s responsibilities involve taking charge of the deceased person’s assets, notifying beneficiaries and creditors, paying the estate’s debts and distributing the property to the beneficiaries. The executor may also be a beneficiary of the Will, though he or she must treat all beneficiaries fairly and in accordance with the provisions of the Will.

First and foremost, an executor must obtain the original, signed Will as well as other important documents such as certified copies of the Death Certificate. The executor must notify all persons who have an interest in the estate or who are named as beneficiaries in the Will. A list of all assets must be compiled, including value at the date of death. The executor must take steps to secure all assets, whether by taking possession of them, or by obtaining adequate insurance. Assets of the estate include all real and personal property owned by the decedent; overlooked assets sometimes include stocks, bonds, pension funds, bank accounts, safety deposit boxes, annuity payments, holiday pay, and work-related life insurance or survivor benefits.

The executor is responsible for compiling a list of the decedent’s debts, as well. Debts can include credit card accounts, loan payments, mortgages, home utilities, tax arrears, alimony and outstanding leases. All of the decedent’s creditors must also be notified and given an opportunity to make a claim against the estate.

Whether the Will must be probated depends on a variety of factors, including size of the estate and how the decedent’s assets were titled. An experienced probate attorney can help determine whether probate is required, and assist with carrying out the executor’s duties. If the estate must go through probate, the executor must file with the court to probate the Will and be appointed as the estate’s legal representative. Once the executor has this legal authority, he or she must pay all of the decedent’s outstanding debts, provided there are sufficient assets in the estate. After debts have been paid, the executor must distribute the remaining real and personal property to the beneficiaries, in accordance with the wishes set forth in the Will. Because the executor is accountable to the beneficiaries of the estate, it is extremely important to keep complete, accurate records of all expenditures, correspondence, asset distribution, and filings with the court and government agencies.

The executor is also responsible for filing all tax returns for the deceased person including federal and state income tax returns and estate tax filings, if applicable. Additional tasks may include notifying carriers for homeowner’s and auto insurance policies and initiating claims on life insurance policies.

The executor is entitled to compensation for his or her services. This fee varies according to the estate’s size and may be subject to review depending on the complexity as well as the time and effort expended by the executor.

One common question is: Does every estate need to go through probate, and how long can estate distribution take?

Estate planning can be an emotionally loaded topic for many people. Apart from the natural fears and difficult decisions involved in making a will and appointing an executor, people regularly reach out to us during the probate process with feeling of uncertainty regarding the legal process.

What Is Probate?

In California, the probate process:

  • Determines whether a legally valid will exists
  • Ascertains the deceased person’s heirs or beneficiaries
  • Evaluates the worth of the decedent’s property
  • Ensures the payoff of the estate taxes and court fees
  • Finalizes property ownership transfer to beneficiaries and heirs

According to state laws, if the decedent did not name an executor, the probate court will appoint an estate administrator to collect assets, pay any estate taxes, debts, and other expenses, and take care of estate distribution among beneficiaries.

Does Every Estate in California Go Through Probate?

The short answer is no. Assets may not need to go through probate court if:

  • The deceased person had owned the property jointly with a surviving spouse
  • The asset is part of a living trust established during the deceased person’s lifetime
  • The deceased person had named a payable-on-death beneficiary for a specific account
  • The net value of the probate estate (estate minus assets that don’t need to go through probate) is less than or equal to $166,250

If a surviving spouse or domestic partner inherits assets, the probate court can approve a simplified procedure with a Spousal Property Petition or Domestic Partner Property Petition, a document that usually enables property ownership transfer in one court hearing. Otherwise, a probate case can take 9-18 months and even longer.

The Stages of Probate in California

A probate process in California typically includes the following stages:

1. Filing a Petition

To initiate the probate proceedings, the will executor or a family member should file a petition with a probate court in the decedent’s county of residence. The probate court will typically schedule a hearing within 30 days.

2. Official Notices

After the probate court schedules a hearing, the executor or administrator needs to publish an official notice in a local newspaper at least three times. The executor also has to send the notice to all legal heirs, beneficiaries, and known or potential creditors.

3. Proving the Will

If the decedent left a will, the court will require proof that the will is legally valid.

4. Collecting Assets

The will executor or estate administrator will have to collect all probate assets, including real estate, vehicles, stocks and bonds, brokerage accounts, and mutual funds. Then the executor will need to file an estate inventory, including an appraisal of relevant property, with the probate court.

5. Paying Creditors

Once creditors have received notice of the deacedent’s passing, they have four months to submit their claims. After that period, any claims will usually be void.

6. Paying Estate Taxes

After paying creditors, the executor will need to discharge all the decedent’s bills and federal and state estate taxes. The estate must be completely clear of all debts and taxes before distribution.

7. Closing the Estate

The estate administrator will provide an account of all legal actions settling the estate (payments to creditors and tax authorities, etc.) and file a petition with the probate court. The petition will also include attorney and executor fees if relevant.

Once the court approves the petition, the executor can distribute the remainder of the estate to the decedent’s heirs.

How an Estate Planning Attorney Can Help With Probate

People may wish to avoid probate to save on court fees, cut down on the property transfer time for heirs, and prevent exposure of sensitive documents in public records.

With some timely planning, an estate lawyer can offer strategies to avoid the probate court, including living trusts, joint ownership, and payable-on-death designations.

If an estate does require probate, a probate lawyer can help streamline and possibly shorten the legal process. The lawyer can:

  • make sure that all the required documents comply with probate law
  • obtain appraisals for real estate assets
  • assist with paying debts, bills, and taxes
  • file with a probate court

California Probate and Trust, PC: Probate Attorneys in Fair Oaks, CA

The probate process can last over a year in California if the estate involves debt, tax disputes, or uncertainty about the deceased person’s will. A knowledgeable probate lawyer can help make sure that the right people get the right assets at the right time.

Our free guide, The 7 Reasons Why You Need an Estate Plan, answers many common questions about end-of-life planning. Call 916-603-2782, leave your name, mailing address, and phone number, and the guide will be on its way to you shortly.

Click to listen as R. Dustin MacFarlane explains what to look for in an estate planning attorney on his podcast, Legally Speaking.

 
To schedule a free consultation with California Probate and Trust, PC in Fair Oaks, CA to answer your specific questions and meet your unique needs, call (916)-674-2066.

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The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice from the individual author or the law firm, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.