August 27, 2014

Ancillary Probate in California

The ease in which people and capital can move from one place to another has naturally caused the accumulation of assets in multiple locations. It is relatively common for a California resident to re-locate to New York for a new job. While living in California, such person might have owned a home and then decided to purchase another home in New York as well. 

If the person passes away ("decedent") in New York while domiciled there, the administration of their estate is not as routine had they only owned assets in one place. That is, since the person owned property in two states, New York and California, probate is arguably required in each state. I say arguably because I cannot comment on the exact nature of New York's probate laws. Regardless, when a person passes away with California assets but is not a California domiciliary, ancillary probate is generally required. The California Probate Code defines ancillary probate "as proceedings in this state for administration of the estate of a nondomiciliary decedent." Prob C § 12501. In understandable English, this means that probate is required if, generally speaking, the probate estate is greater than $150,000 in assets. This $150,000 figure does not take into account encumbrances, i.e. a home mortgage. Thereby if the decedent's home is worth $500,000 but has a $400,000 loan, the conventional 80/20 home loan, probate is required because the value of the probate estate is $500,000. However, if the assets of the nondomicilary are less than $150,000, excluding real property, the assets can be collected via a small estate affidavit. Probate Code §§13100-13116. 

There are a couple of points worth mentioning about an ancillary probate. First, all the steps of a regular probate are required for an ancillary probate. There is no abbreviated ancillary probate procedure. I can assure you of this. Second, the fees for an ancillary probate are the same as a regular probate. Hence, there are only minor differences between an ancillary probate and a regular probate. Thus, the dreaded time and expense of a California probate also applies to a California ancillary probate.

This past spring I wrapped up an ancillary and regular probate around the same time. For the former case, the decedent was a resident of Maryland but had a large bank account at a credit union in California. Ancillary probate was then needed here in California even though the decedent had basically no connection to California except for one bank account, albeit a large one. Unfortunately the decedent did not list a beneficiary on his bank account which otherwise would have prevented the necessity of an ancillary probate. In doing the two probates simultaneously I saw few, if any, distinguishing features between the two cases. Each probate required the same steps: (1) collection and appraisal of assets, (2) payment of debts and (3) distribution of the remaining property to the beneficiaries.