The Pitfalls of not Getting Proper Legal Advice

Dear Len & Rosie,

My mother was widowed last July and is names as executor in my father’s will. They owned together a community property account with a brokerage firm, which requires a certified court appointment indicating my mother’s authority to act on behalf of the estate. This plus other documents will split the account into her account and an estate account which can then be transferred back to her account. This seems like a lot of work to simply remove a name on an account.

Sandy

Dear Sandy,

The reason why it’s not so easy to remove your father’s name from the brokerage account lies in the manner in which the account was titled. Assets titled in community property do not automatically pass to the surviving spouse like assets titled in joint tenancy or as “community property with right of survivorship”. Your father’s half of this account belongs to his probate estate and must pass under the terms of his will.

There are three means of getting your father’s name off of the account. If your father’s estate is worth less than $150,000, then your mother, assuming he left everything to her, can collect the account with a small estate declaration under California Probate Code section 13101. Assets in joint tenancy or with pay on death beneficiaries or in a trust don’t count against the $150,000.  Nor do vehicles registered with the DMV.

If your father’s estate is worth more than $150,000 and he left everything to your mother in his will, then your mother can petition the court for a Spousal Property Order. This will require a court petition and a hearing, but a spousal property order is easier, cheaper, and faster than going through probate. She could get the account in her name as quickly as a month after her first visit to the lawyer.

If your father’s will left his estate to someone other than your mother, and the estate is worth more than $100,000, then your mother, as the executor named in the will, should petition the court to probate her husband’s estate. She will have access to the money once she is appointed as executor and is granted “Letters Testamentary” by the judge, but she won’t be able to distribute the account to your father’s heirs until probate is closed, which takes on average 9-15 months after the probate petition to administer the estate is filed with the court.

Your parents could have avoided the difficulties your mother is having today by getting the proper legal advice. They could have created a revocable trust that would avoid having to go to court on the second death as well as the first, or they could have simply titled their accounts as joint tenants or as community property with right of survivorship. When your mother meets with a trusts and estates attorney to take care of her husband’s estate, she should also take the time to create an estate plan to save her children time and money after her death.

Len & Rosie