Younger sister died leaving behind teenage son and no estate planning, now what?

Dear Len & Rosie,

My younger sister died without a will. She almost no money. Sadly enough, she also left a 16-year -old son. She did have some life insurance of which I am the beneficiary, but she left two paychecks as well.

I will set up an account to pay for her son’s care, but in order to cash the paychecks, I need to be named Administrator of my sister’s estate. How can I do this myself so I can save money for her son? Everyone at the bank says I can easily be named as Administrator, but what do I need to do? Her son is such a good kid and wonderful student. If I can do this myself instead of spending money on a lawyer, I would be so grateful.

Moira

Dear Moira,

Administrator is just another word for executor. The only difference is that executors are named in wills, and administrators are appointed directly by the court. The duties and authority of administrators are exactly the same as those for executors.

The bank is telling you that you need to go to court, file a petition for probate, and get appointed as administrator of your sister’s probate estate before you can cash her old paychecks. This is incorrect. Because your sister’s estate is worth so little, you can take a legal shortcut. If your sister died as a resident of California and her estate is worth less than $150,000, then her heirs can skip probate and collect her assets with a small estate declaration under California Probate Code section 131001. Many banks know about this and even have their own small estate forms.

There are several twists you should know about. First, you have to wait until 40 days after your sister’s death to be able to sign the 13101 declaration, and you will also have to give the bank a certified copy of your sister’s death certificate. Also, you will become personally responsible for your sister’s debts, up to the amount of money you collect using the declaration.

But you can’t just sign a small estate declaration just yet. Assuming your sister wasn’t married, her son is her sole heir and shall inherit the entire estate. The problem is that your nephew is still a minor, and cannot legally execute a small estate declaration. You can sign it for him, but you have to have the legal authority to do so. That’s why, after all this discussion of avoiding probate and saving on legal fees, I am sending you off to an attorney. In order to legally collect your sister’s estate and hold it for your nephew, you have to go to court.

There are two things that you can do. You can petition the court for appointment as your nephew’s guardian, which I think you should try to avoid. There isn’t a lot of money here and the guardianship will last only two years anyway. What I think you should do is to petition the court under Probate Code section 3410 to put the money into a blocked account, or into a custodial account under the Uniform Transfers to Minors Act. You will not have escaped the clutches of the court, but at least you will have avoided probate.

Len & Rosie

Transfer on Death Deed or Joint Tenancy?

Dear Len & Rosie,

My sister is planning to write her will and give her house to me upon her death. She already has advance directive. She nor I can afford to retain an attorney for his or her services. She wants to write what she wants and have it notarized. Her house is her only asset. I realize since you are attorneys, it’s a given that you advise, no, don't to that. We just plain cannot afford legal services. Will a notarized will be a problem? There is no one to contest her decision so that would not an issue. Should we use one of those digitized form templates and have that notarized? Thank you in advance.

Maria,

Dear Maria,

Our advice in this column is always at no charge. We write the column to inform the public of their options regarding estate planning and some common pitfalls to avoid.

Wills are not notarized in California, ever. Wills must be witnessed by two adults who are not inheriting under the will. If your sister wants a cheap and easy will, she can download one from the California State Bar webpage at www.calbar.ca.gov. Or she can just email us and we’ll email her the form.

The problem with wills is that they do not avoid probate, which is every expensive and takes one to two years to complete. If your sister wants to avoid probate, she has a couple of more options. One is to sign and record a Transfer On Death Deed from herself to you. She can have a lawyer prepare the deed, or she could pay a Title Insurance Company to do is for her. We don’t recommend doing it yourselves, because it’s way too easy to make expensive mistakes when drafting deeds.

An alternative may be better. If the two of you live together in your sister’s home, she could add you on the deed as a joint tenant. If she does, and more than a year passes before her death, you will inherit the home without probate and without a reassessment under Proposition 13 because you’re a cohabitant. This would likely save you thousands of dollars in property tax every year. There is a downside to a joint tenancy deed, which should be kept in mind. Your name won’t come back off the deed unless you die first or willingly sign the home back to your sister. A joint tenancy deed is an irrevocable step, so she had better be sure she’s not ever going to change her mind about you getting the property.

Your sister, and you for that matter, should also have a Durable Power of Attorney in addition to her will and advance health care directive. While she can have a lawyer prepare one for not much money, there are also forms available for this on the Internet. She should look for the California Statutory Durable General Power of Attorney online.

Len & Rosie