Two-Step Procedure Sidesteps Probate
In a recent column, I wrote that when community property is left to a surviving spouse, the spouse must still go “through probate to clear title to the house.”
That is not necessarily so, as explained by Donald P. Silver, a Santa Monica lawyer. “There is an alternative to a full-blown probate where assets are left outright to the surviving spouse,” he writes.
“Instead, a spouse could utilize a two-step court procedure by filing a spousal property petition. This procedure is relatively quick (six weeks compared to a minimum of six months with a probate) and far less costly than a probate.
“With this two-step procedure,” explains Silver, “clearing title to a $300,000 house might cost $1,000 in attorney’s fees and nothing in executor’s fees (because there is no probate, there is no need to appoint an executor). With a probate, the attorney and the executor would each receive a statutory fee of $7,150. That’s a savings of $13,300 by using the spouse property petition.”
If you’d like to try to file the petition without a lawyer’s help, the process is explained in the Nolo Press book, “Planning Your Estate, Wills, Probate Avoidance, Trusts & Taxes.” You won’t stay entirely away from probate court. The petition is filed with the probate department of your local county Superior Court. The correct forms can be found at the Civil Court Clerk’s office.
In the same column, I mentioned that even if your house is in joint tenancy, a lawyer may be able to file a petition during probate on behalf of the surviving spouse asking for a court determination that the home was actually held in community property. If successful, you can obtain the tax advantages of community property.
Under New Law
Silver agrees that is generally correct, but, as a result of a recent law, it may not be true if you bought the house in 1985 or thereafter. Under the new law, a written agreement must exist to show that joint-tenancy property is really community property. However, oral agreements entered into before Jan. 1, 1985, are still valid.
So, he says, to ensure “smooth sailing” in probate court, change the deed to reflect ownership in community property rather than joint tenancy. That’s a lot easier than trying to prove you had an oral agreement before 1985. And if the surviving spouse is incapacitated, say from an auto accident, how are you going to prove the existence of the oral agreement? No one will be available to testify.
The story may be different if you’re in divorce court rather than probate court. When the divorce judge is deciding how to divvy up a couple’s assets, the law now says that property acquired during marriage in joint-tenancy form is presumed to be community property. You can rebut this legal presumption if the deed says it’s separate property or there is a written agreement saying that the property is separate property.
Mind boggling, isn’t it? The law says one thing in one context and nearly the opposite in another. I guess that’s why we need lawyers to understand the laws. Then, again, it was probably a lawyer who wrote them.
Legal Brief
The L.A. County Bar offers free legal assistance to AIDS and hospice patients who can’t afford lawyers. As long as the patients meet income-eligibility guidelines (net pay for one person of not more than $938 per month; $1,231 for a two-person family), they can receive five free hours of legal consultation from volunteer lawyers. For more information, call (213) 622-8840.
