A trust or will is like a map. You might have the document, but it won’t get you to your destination unless you follow it. That is, the trust or will might tell you where a deceased or incapacitated person’s assets need to go, but you still need to take them there. You need to “administer” the instrument.
Conservatorships and guardianships are, in essence, particular kinds of administrations. If these proceedings are disputed, they might end up in litigation. But otherwise they are basically the administrative process of handling assets for people who are unable to do so themselves.
“Probate” is the process through which a person administers a deceased person’s assets. The court oversees the process. It can be extremely complicated, and even a standard probate is riddled with deadlines and intricate procedures. Probates all but require the help of a qualified attorney.
During a probate, someone must collect, manage, and distribute the decedent’s assets. That person is known as the executor, administrator or, more generally, the personal representative (“PR”). In handling the tasks a probate requires, the PR must follow the decedent’s will. If the decedent did not have a will, the estate is “intestate,” and California law will dictate the people to whom the property will pass. The PR must be cautious in this process, because California law imposes legal duties on the PR. If the PR does not do their job appropriately, they risk being held liable.
Death may be inevitable, but probate is not. If the decedent prepared an estate plan, the decedent might have enabled their loved ones to avoid probate by holding their assets in a trust, jointly with another person, or in accounts with designated beneficiaries or pay-on-death recipients (such as IRA, 401(k), insurance policies, or other accounts). If a decedent’s assets are less than roughly $165,000, those assets can also be distributed outside of probate. While these things allow a decedent’s loved ones to avoid probate, Parnall Trust & Estate Law can still help with this essential part of moving assets from a decedent to the rightful recipient.
If a probate is necessary, it will be unique. However, every probate generally involves the following steps:
- Locate the decedent’s will, if one exists;
- Prepare and file pleadings to request that the court (1) appoint the PR and (2) either accept the will’s validity or establish that a will does not exist;
- Notify all beneficiaries, heirs, or others at various steps throughout the process;
- Notify all of the decedent’s creditors and pay the decedent’s lawful debts;
- Pay all required taxes;
- Gather (“marshal”) all of the decedent’s assets, identify (“inventory”) them, and assess (“appraise”) their value;
- If necessary, sell some or all of the assets;
- Account for all of the PR’s transactions during the probate;
- Distribute all remaining assets to the rightful recipients—i.e. the beneficiaries under the will or, if there is no will, the decedent’s heirs.
During a probate, conflicts often arise. People may dispute the validity of a will. They may dispute how the will is interpreted. They may dispute whether a creditor claim is valid. They may assert that the PR or someone else took estate property for themselves. They may assert that the PR is doing a bad job and should be replaced. These and other types of disagreements must be resolved—by litigation and trial if necessary—during the probate process.
The PR does not work for free. They are entitled to a fee that California law sets forth. The PR’s fee is calculated as a percentage of the estate’s total assets. The same is true for the PR’s attorney. Sometimes a probate will require the attorney to be paid during the process, such as when litigation is required. Generally, though, the attorney is not paid until the conclusion of the probate. Moreover, the deceased person’s estate virtually always bears the legal costs.
The length of time needed to complete a probate varies, but on average is 12 to 18 months. It will be shorter or longer depending on a number of factors, including the estate’s size and complexity, the PR’s diligence, whether any conflicts arise, and the court’s schedule and case load.
Parnall Trust & Estate Law has extensive experience conducting probates. Given that we are litigators, we are also well-equipped to handle the disputes that can arise during a probate—or to avoid those disputes in the first place. PRs who engage us are able to rest assured that, as their guides throughout the process, we will help them efficiently handle the probate and address whatever problems might arise.
People often think that if a trust exists, things will take care of themselves. Not so. A trust is a great way to accomplish various goals—to transfer or protect assets, address long-term care issues, or provide for a loved one’s special needs. But these things don’t happen automatically. Handling the trust’s assets takes thought and work. The trust must be administered.
For example, a probate might be avoidable if a person dies with a trust. But various tasks still exist. Someone must still gather the decedent’s assets, pay their taxes, handle debts, etc. If there is a trust, the “trustee” is the person who must handle those things.
A trust administration is similar to a probate administration. As with a probate, trustees must identify the proper beneficiaries, send specific notices, re-title accounts and assets, communicate with beneficiaries, prepare accountings, file tax returns, pay taxes, document various things with county officials, gather/ appraise/ distribute assets, and more. Trustees must follow the law and the trust’s terms while doing these things.
A trust administration also has some key differences from a probate administration. One big difference is that a court usually does not oversee a trust administration. This lack of court oversight creates more space for the trustee to work. It also creates more space for things to go wrong.
And the ways that a trust administration can go wrong are plentiful. A trust that contains errors due to bad or lazy drafting will create issues from the start. Even a flawless trust can invite problems. For example, the trust beneficiaries may already be primed for conflict among themselves or with the trustee. A trustee’s poor handling of the trust administration also spells trouble.
When a person becomes a trustee, they take on a serious job and a host of legal duties. The trustee must account (i.e. demonstrate that all assets have been handled properly); provide information; put the trust beneficiaries’ interests ahead of their own; etc. Trustees must be trustworthy and diligent. But pitfalls await even the best trustee. A trustee’s missteps—whether intentional or inadvertent—can botch the best estate plan. Those missteps can severely damage family relationships as well. They can also cost the beneficiaries, and the trustee, a lot of money.
Moreover, a trustee’s past relationship with the decedent does not give them a free pass. Even if the trustee is a family member or friend, that fact takes a back seat to their role as trustee. The relationship will not allow the trustee to escape their misdeeds or inaction. Every trustee must honor their fiduciary duties. If any trustee acts improperly or fails to act, the costs to them can be tremendous.
These things may seem esoteric, but they’re not. Just imagine Cinderella’s dad creating a trust to benefit his daughter, then appointing the stepmother as trustee. Similar real-life stories are all too common. People have a knack for doing bad things after a loved one dies—often convincing themselves that they are not actually doing anything wrong in the first place because, e.g., “of course Aunt Sue would have wanted me to have all the money.”
Parnall Trust & Estate Law routinely represents trustees and beneficiaries in all aspects of trust administration. We protect our trustee clients from liability by advising them how to properly administer the trust and honor their fiduciary duties. We protect our beneficiary clients by enforcing their rights and holding bad trustees accountable. We will work closely with you every step of the way in a trust administration. And should a dispute arise, you can rest assured that we will work to negotiate a resolution or, if necessary, litigate the matter in court.
Conservatorships and Guardianships
Conservatorships and guardianships are proceedings in which a court appoints a third party to manage a person’s physical or financial affairs. The two proceedings are similar. Conservatorships are for adults who are mentally unable to manage their personal needs or their finances. Guardianships are for children who need someone to handle these things.
Conservatorships generally arise when someone notices that family member or friend has become unable to manage their affairs. They may be making uncontrolled purchases, hoarding, or failing to see that someone else is taking advantage of them. They may resist the concerned person’s efforts to help them—possibly at the urging of a wrongdoer. The concerned person contacts an attorney to explore options to help. If no documents exist to provide someone with authority to step in, a conservatorship may be the only option. Guardianships can arise where a parent dies or becomes unfit to manage the needs of a child.
Conservatorships and guardianships generally fall into two categories: those “of the person” and those “of the estate.” A person’s loved ones can request either or both of these options.
- “Of the person” proceedings are designed to empower someone to make decisions relating to an individual’s personal care or physical being, such as medical needs or shelter.
- “Of the estate” proceedings are designed to empower someone to make decisions relating to an individual’s financial affairs, such as paying bills, managing assets, and preventing financial abuse.
- These proceedings can also be “temporary” or “general.” A temporary appointment can address emergency situations in which a person or their property require immediate protection. It is often the first step toward a general conservatorship, which is meant to last for the long term.
The establishment of conservatorship is a serious undertaking. After all, the end result is that a person’s power to manage their own affairs will be given to someone else. The same is true with guardianships, though perhaps to a lesser degree because kids generally need adults to handle their affairs in the first place. In either proceeding, a judge will carefully scrutinize whether it is necessary. If it is, the judge will then decide who is best suited to serve as conservator or guardian. Once established, the court will periodically ensure that the proceeding remains necessary, that funds are properly accounted for, and that the matter otherwise stays on track.
Disputes often arise along the way and give rise to litigation. The parties may disagree on the necessity of the proceeding, on who is best suited to serve as the conservator or guardian, or on that actions that person has taken once appointed.
Parnall Trust & Estate Law is available to help with your conservatorship or guardianship needs.
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Dave Parnall is a seasoned trusts and estates attorney who focuses on litigation, administration, and mediation. He fights hard for his clients, but also emphasizes alternative dispute resolution when appropriate. Mr. Parnall has taken numerous cases through trial and has substantial appellate experience.