Dear CALDA Members,
I have been tracking two bills that concern areas of law that many LDAs practice in. AB699 would establish the "Transfer on Death Deed" (hereinafter "TOD Bill"). AB1305 would raise the threshold for simplified probate proceedings (hereinafter "Small Estate Bill").
The CALDA leadership supports these two bills and would like to encourage members to contact their Assemblypersons and state Senators to encourage their passage.
Read CALDA's press release: California Association of Legal Document Assistants urges support of AB 699 and AB 1305
Each consumer-friendly bill would simplify the area of law it covers. Many estates would benefit from simpler death transfer procedures, which would become easier, less costly, and less requiring of an attorney's services.
Many LDAs practice in these areas of law, and the simplification would bring them additional business, and their passage may even encourage LDAs who do not currently practice in those areas to explore learning about them.
Ian M. Duncan
Following is a brief summary of each bill:
#1 Transfer on Death Deed Bill
A "Transfer on Death" deed exists in many states; its purpose is to effectuate the transfer of a specific parcel of real property to designated beneficiaries (and thereby avoiding probate of the property). The deed works like a "Pay on Death" designation on a bank account whereby a person can fill out a beneficiary card at a bank or a "Transfer on Death" designation for securities. Essentially, the owner of a bank account or a mutual fund account can say who gets the account at the owner's death and this designation avoids probate. The TOD bill would create this same opportunity for real property.
Currently, a homeowner with a simple estate can make these simple "POD/TOD" designations on every asset they own EXCEPT for his or her home. Currently, in order to achieve probate avoidance, a homeowner needs to do a costly living trust. The TOD Deed would eliminate the need for doing a living trust for many individuals, who would be able to designate a beneficiary who could inherit their home free of probate (like they can with their bank accounts).
Many people already try to accomplish this simple probate-avoiding task by creating an ill-advised joint tenancy. They know adding their favorite child to their property as a joint tenant is cheaper than a living trust, but this causes all sorts of potential hazards, tax problems, and unintended consequences which would be prevented by the TOD deed.
The TOD Deed isn't for everyone, as it does not provide for a Trustee who can make decisions regarding the property. So if "Mom" wants to appoint her daughter to sell the property and just distribute the proceeds to her ungrateful children who don't get along with each other, Mom should still do a living trust.
Good for LDAs:
Currently, many LDAs are uncomfortable with offering living trust preparation as one of their services. Even if they practice in non-family law areas, they don't offer trusts because they don't want to be associated with the insurance company "trust mills" of the '90s that helped spawn B&P 6400 et seq, or they just believe that trusts inherently require legal advice. These LDAs, who would surely be comfortable preparing a TOD Deed, would pick up the business they are currently opting out of because fewer individuals would require living trusts.
#2 Small Estate Bill
Currently, one can collect a small estate valued at less than $100,000 by way of a couple different procedures.
a) If there is no real property, then an estate worth less than $100,000 can be collected by way of a very simple affidavit that is not filed with any court; it's just signed by the heirs and presented to the bank, the DMV, or wherever else the decedent's assets are located.
b) If the estate contains real property and is worth less than $100,000, then a simplified petition procedure can be used which is far easier than a "full" probate proceeding.
c) If the real property is worth less than $20,000, then a very simple affidavit procedure is used; the real property is transferred without any judicial oversight at all, and the filing fee is miniscule.
Note: 'a' and 'c' can be combined and used in conjunction with each other.
The Small Estate Bill would raise the thresholds for these procedures as follows:
a) The "Small Estate Declaration" procedure's threshold would be raised from $100,000 to $200,000.
b) The "Petition to Determine Succession" procedure's threshold would be raised from $100,000 to $200,000.
c) The "Affidavit re: Real Property of Small Value" procedure's threshold would be raised from $20,000 to $100,000.
With the general decrease in property values, I have personally begun several probate procedures in the last two years where the properties are in the $100k-$200k range. These cases would have been long completed because they would have qualified for the simpler procedures. Several small estates whose families do not have a lot of money will be easily and cost-effectively distributed under these new rules.
Good for LDAs:
These small estate procedures are more suited for LDAs than for lawyers, so hopefully LDAs will gain business from this change. These areas are really easy procedures to help with (compared to full probate administration). More estates will qualify for these procedures, so hopefully consumers will seek out LDAs instead of lawyers.