Can a Small Estate be Handled Without Probate?

Muhammad Ali travels to Vietnam with Albro Lundy

Can a Small Estate be Handled Without Probate?

By Brad N. Baker

Not all estates without a Trust or Will have to be probated even if the decedent did no planning whatsoever; however, the larger the dollar sums in the estate, the less likely that probate can be avoided. California has a statute on the books that allows up to $150,000 to be transferred without probate after a person dies.

How do I know if my estate qualifies to transfer assets without probate?

In computing the dollar amount to see if you qualify for this statute, there are certain assets that are NOT, counted.  California Probate Code Section 13050 sets forth the exhaustive list, but they are basically as follows:

1.  Any assets that are held in joint tenancy with a person who survived the Decedent even if the surviving joint tenant did not contribute to the jointly held asset.

2.  Any vehicles with title in the name of the Decedent.

3.  Any boats held in the name of the Decedent (yes even multi-million-dollar yachts are not counted towards the $150,000 limit!) .

4.  Any mobile home, manufactured home, truck camper, and, drummmm rolllll, any floating home held in the Decedent’s name.

5.  Any payable on death accounts (POD accounts), assets held “as trustee for” (ATF accounts), or assets that have a named beneficiary, such as life insurance, annuities, IRAs, and 401(k)s.

If you are under the $150,000 limit after excluding all of the above items from the computation, then a couple of hurdles must still be cleared to be able to use the affidavit/declaration process that is set forth in Probate Code Section 13101.

What are the steps to transferring assets without probate, if I qualify?

1.  At least 40 days must have elapsed since the Decedent died.

2.  No probate proceeding is open or has been opened for the Decedent.

3.  Oh yeah, you have to be entitled to the asset being transferred by way of the 13101 Affidavit.  (Sometimes this is a little tricky, so check with a lawyer to make sure that the correct people are signing the declaration to get the transferred property.)  California Probate Code Section 13006 (just Google it!) sets forth who are the “Successors” of the Decedent.

4.  You will need a certified copy of the Decedent’s death certificate for each transfer requested. All individual(s) or trustee(s) entitled to the asset must sign the declaration and have the signature(s) notarized.  (Yes, the trustee named in a Pour-Over Will would be the Successor, not the ultimate beneficiaries of the Trust.)

Can I transfer assets by myself?

Many people find that although the above can be accomplished on their own, the 13101 declarations seem to work better in the world of finance when an attorney’s letter attaches the declaration when it is mailed or delivered to the institution holding the Decedent’s asset.  (I believe that the holder of the asset has a better level of comfort that they are turning over the asset to the correct person(s) when an attorney’s letter goes with the declaration.)

Should I get Durable Powers of Attorney even if I don’t have a Will?

So, do we really need to plan if this nifty procedure exists?  If you promise to die quickly once you lose capacity, then you are pretty safe if you are within the statutory limits. However, if no planning whatsoever is done, and you don’t die quickly, then we could be in a conservatorship situation because no one has access to the accounts until 40 days after the Decedent “dies”.  See the gap?  It doesn’t work for incapacitated situations.  So it is recommended that you still get Durable Powers of Attorney in place, one for Asset Management, and another for Medical Decisions, even if you don’t do a Living Trust or a Will.

Please Note: This document does not constitute legal advice. Please consult an attorney for legal advice on what to do in a particular situation.

Albro Lundy III attorney
Brad N. Baker

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To learn more about how Baker, Burton & Lundy’s experienced attorneys can represent or advise you, please call (310) 376-9893 or fill out the form below.

How to Negotiate Common Area Costs (CAM) in Commercial Leases

Commercial Real Estate Tenant Tips

How to Negotiate Common Area Costs or CAM in Your Lease

Tenant Tip Series

By Clint Wilson

Tenant Tip Series is a series of different tips provided by Baker Burton & Lundy for commercial tenants to consider while negotiating retail leases, restaurant leases, commercial leases or industrial leases. This series will regularly address a variety of important tenant-oriented issues that arise during lease negotiations.

Today’s tip identifies different strategies that any tenant in a multi-tenant project or shopping center should utilize during lease negotiations to gain some cost control measures over Additional Rent. “Additional Rent” is the amount a tenant is obligated to pay under the lease in addition to the base rent and includes the amorphous “common area costs” (also commonly known as “CAM Costs,” “Operating Costs” and “Operating Expenses”). A tenant in a multi-tenant project or shopping center will generally be obligated to reimburse the landlord for its pro rata share of such expenses, which are usually broadly defined to include any and all costs the landlord incurs for real estate taxes, and in maintaining, repairing, replacing, improving, insuring and managing the project or shopping center.

The Issue With Common Area Costs (CAM)

Since common area costs and the increases thereof are generally not fixed or even capped, they often outpace the annual increases in base rent. Additionally, landlord-oriented leases will include few or no limits on the type of and amount of charges the landlord includes as common area costs, thereby enabling the less scrupulous landlord to use common area costs as a means of profiting from such charges. It’s worth emphasizing that the purpose of common area costs is to reimburse the landlord for legitimate expenses associated with the project or shopping center (and specifically the common areas) and not to provide the landlord with the opportunity to profit from such charges. With that said, there are many charges and expenses that should either be excluded from the definition of common area costs or capped to ensure that tenants are paying only their fair share of such costs.

As an example, most leases provide that the landlord can charge the tenant for a management fee for the landlord or some third-party company to manage the project or the shopping center. Without a cap on the amount the landlord can charge as a management fee, the landlord could charge a reasonable management fee or an exorbitant management fee for the landlord’s cousin to manage the project or shopping center. The landlord might also charge a separate administration and supervision fee in addition to the management fee. We have seen these fees as high as 30% of the common area costs, which is an indicator that the landlord is using common area costs to generate additional income. As such, the importance of negotiating certain cost control measures over common area costs becomes paramount in controlling the amount the tenant pays in additional rent.

There are also various other charges and expenses that should be excluded from common area costs which are usually included by the landlords with more favorable leases, including capital expenditures, attorneys’ fees, damages caused by the acts of landlord, etc. In order to make sure that the tenant is paying for legitimate common area costs, here are few suggestions.

Steps To Reducing Common Area Costs (CAM)

1. Establish a First Year Cap on CAM Costs

First, the tenant should start by asking the landlord for a budget of what common area costs are projected to be for the first calendar year during the lease term. A good starting position would be to then ask for a first year cap on common area costs based on the projected common area costs set forth in the budget. If the landlord rejects this proposal, then the tenant can propose that the projected common area costs plus 5% should serve as the first year cap, which will provide the landlord with some flexibility if the actual common area costs are more than what was projected in the budget. Also, getting a budget of common area costs will provide the tenant with insight as to what expenses and charges the landlord intends to include in common area costs. This is helpful in identifying any expenses and charges that should be excluded from common area costs, as further discussed below.

2. Set an Ongoing Cap on CAM Costs

Along with the first year cap, the tenant should also request an ongoing cap on common area costs so that such costs cannot increase year-over-year in excess of some percent (e.g., 5%). An ongoing cap will provide the tenant with a much clearer picture of what common area costs (and additional rent) will be in the future. Being better able to forecast future expenses is beneficial to any tenant. It’s worth noting that certain items of common area costs are generally excluded from ongoing caps, including real estate taxes and insurance costs.

3. Negotiate the Exclusions from CAM Costs

The tenant should also provide the landlord with a list of items that should be excluded from common area costs, such as mortgage payments, capital expenditures and management fees in excess of some percent of common area costs, etc. This ensures that the landlord is not using common area costs to generate profits but to actually cover legitimate expenses relating to the common areas of the project or shopping Center. We typically negotiate on behalf of our client-tenants an extensive list of expenses that are excluded from common area costs.

4. Include an Audit Right

Lastly, the tenant should always negotiate for an audit right (i.e., the right to review the landlord’s books and records relating to common area costs) to keep the landlord honest. If the tenant elects to have an audit performed and the results show that the tenant overpaid for common area costs during the applicable year, then the landlord should then reimburse the tenant the overpayment amount or credit such amounts from the next installment of rent.

Final Thoughts on CAM Cost Control

These are just a few cost control measures that can assist the tenant with controlling and reducing its common area costs and Additional Rent. Over the term of the lease, which might be 5 to 20 years, this can equate to considerable savings to the tenant. Obviously, negotiating to include these measures depends on many factors, including the leverage either party possesses in the negotiation and what is considered customary at that time in that market. If you need assistance in the negotiation process, please reach out to an attorney experienced in commercial lease negotiations.

Please Note: This document does not constitute legal advice. Please consult an attorney for legal advice on what to do in a particular situation.

 

Albro Lundy III attorney

Clint Wilson

call Baker, Burton & Lundy

To learn more about how Baker, Burton & Lundy’s experienced attorneys can represent or advise you, please call (310) 376-9893 or fill out the form below.

BB&L Congratulates New Partner Evan Koch

Baker, Burton & Lundy Law Partners

BB&L law partners Albro Lundy, Evan Koch, Brad Baker & Kent Burton

Baker, Burton & Lundy Contratulates New Law Partner Evan Koch

Baker, Burton & Lundy is pleased to announce that trial lawyer Evan Koch has been made a partner. After meeting BB&L partners Kent Burton & Albro Lundy on the volleyball courts of Hermosa Beach in 2011, Evan began working as a full-time attorney in the litigation department. Evan’s skill in getting results for his clients was noticed by the legal community and he has been recognized as a Rising Star by SuperLawyers in 2014 – 2018.

“Evan has become an integral part of our winning team,” said partner Albro Lundy, “winning both clients and cases. His superior legal analysis and keen aptitude has added to the foundation of our growing litigation practice especially in the areas of personal injury, employment and business litigation resulting in several seven figure judgments and settlements. Best – our clients really like him.”

Committed to the South Bay community, Evan is an active member of the South Bay Inns of Court, Co-Chair of the Labor and Employment Section of the South Bay Bar Association, volunteer in the South Bay Bar Association’s “Ask a Lawyer” Program, and graduate of Leadership Hermosa Beach (Class of 2014). Evan graduated with honors from Michigan State University and cum Laude from Washington College of Law at American University, Washington DC. Before joining Baker, Burton & Lundy, Evan also clerked for the Honorable Rex Heeseman at the Los Angeles Superior Court and the Honorable Reggie B. Walton at the United States District Court for the District of Columbia.

Albro Lundy III attorney

Evan Koch, Trial Attorney

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To learn more about how Baker, Burton & Lundy’s experienced attorneys can represent or advise you, please call (310) 376-9893 or fill out the form below.

How to Avoid Having a Lien Recorded Against Your Home after Construction

Avoiding Construction Liens on your Home

How to Avoid Having a Lien Recorded Against Your Home after Construction

By Clint Wilson

During the remodel or renovation of your home, here are some steps to take to help ensure that your property remains lien free after construction is complete. First, it’s worth mentioning that during construction, various subcontractors and materialmen may have sent you preliminary lien notices. These notices are meant to inform you which subcontractors and materialmen, if not paid in full, have the right to record a lien against your property. If any subcontractors or materialmen have previously provided you with a lien notice, you will definitely need to obtain unconditional lien releases upon completion of work.

With that said, the home improvement agreement between you and the general contractor should already provide for most of the following, however, if it does not (or if there was no agreement), here are some items worth requesting from your general contractor to help ensure your home remains lien free after construction.

  • Conditional lien releases from those subcontractors and materialmen that have completed their work (or portion thereof) but have not been paid in full.

    Conditional lien releases should be submitted by the general contractor with each application for payment or invoice. “Conditional” means that they will release their lien rights upon getting paid. Each conditional lien release should be followed by an unconditional lien release once payment has been made.

  • Unconditional lien releases from those subcontractors and materialmen that have been paid in full.

    Unconditional lien releases from subcontractors and materialmen that have completed their work and have been paid in full should accompany subsequent applications for payment or invoices.

  • Unconditional lien releases from all subcontractors and materialmen once the general contractor has been paid in full, or preferably, prior to final payment being made.

    Note that pursuant to an agreement with the general contractor, the owner might have negotiated for the right to withhold some portion of the general contractor’s fee until the owner is provided with all unconditional lien releases and the project is complete. As such, the general contractor will need to ensure that all subcontractors and materialmen are paid and have provided unconditional lien release prior to receiving its final payment.

  • Notice of Completion.

    Also, depending on the project, a Notice of Completion recorded by the general contractor against the property. The Notice of Completion will limit the period of time that any subcontractor or materialmen can file a lien against the property from 90 days to 30 days.

Hopefully by asking for these items, or better yet, having the general contractor required to provide these items in your home improvement agreement, you can avoid having a lien recorded against your property. Avoiding a lien is always easier than removing one from your property and it is prudent to seek legal advice for your specific situation.

 

Please Note: This document does not constitute legal advice. Please consult an attorney for legal advice on what to do in a particular situation.

 

Albro Lundy III attorney

Clint Wilson

call Baker, Burton & Lundy

To learn more about how Baker, Burton & Lundy’s experienced attorneys can represent or advise you, please call (310) 376-9893 or fill out the form below.