How to Gain Access to Inherited Money…

Dear Mr. Miller:

My uncle died recently and I am his closest relative.  He had a $50,000 bank account at a local bank.  I took care of my uncle for several years and I know he wanted me to have the money.  Unfortunately, my uncle’s bank is not my bank.  I want to get access to the money as I have a $47,000 mortgage I would like to pay off. 

When I went to my uncle’s bank to inquire, they told me I needed something called “letters” from the Probate Court and that I needed an attorney.  What are they talking about?  Then when I talked to someone higher up, she said I don’t need letters and then issued a check to “The Estate of John Doe” (not my uncle’s real name).

Dutiful Nephew

Probate Proceedings and Letters
Small Estates Procedures Act
Entitled Person
To Whom Do You Present The Affidavit
The Extra Legal Method

Dear Nephew:

You have entered the never-never land of banks.  Most of the employees are well meaning but simply not adequately trained in the field of estates.  Seemingly every bank has different policies, every branch interprets them differently, and the interpretations seem to change from week to week. 

Probate Proceedings and Letters:  The reference to “letters” was that, typically, when one dies, their estate and all of their assets go through Probate (a proceeding in State Probate Court) to determine who is entitled to each of the assets.  A court order to that effect is issued at the end of the proceeding (typically 10-14 months).  You are not required to have an attorney but it is usually a good idea.  Here is a link to the attorney fee schedule. Letters are the official document of authority issued by the court to the person in charge of the estate (executor, administrator, etc.) that that person can hand to the bank to obtain control of the account. 

Fortunately, there are many ways by which to avoid Probate.  Living Trusts are, of course, one method.  Was title to the account held in a living trust created by your Uncle?

But there are other Probate avoidance methods, too.  For example, were you named as a “pay on death” beneficiary on the official bank records for the account?   If so, the death certificate and official identification for yourself (i.e. a current driver’s license) should be all you need. 

Small Estates Procedures Act:  Assuming none of the above methods applies in your case, you still have one other card to play in order to avoid probate.  It is referred to as the Small Estates Procedures Act.  As far as I know, every state has one and they are all very similar to each other.  In California, it requires that your uncle’s assets that would be subject to Probate (i.e. not anything held in the Living Trust, doesn’t have specified beneficiaries, etc.) be less than $150,000.  If the only asset was that $50,000 bank account you should be good to go.  The Act indicates that the person entitled to the assets sign an affidavit (i.e.letter) that has some specific statutory language and that it be signed and sworn to in front of a notary public. 

Entitled Person:  Now, the only question is whether you are the one entitled.  If there is a Will, then the person named in the Will is the entitled person.  If there is no Will, then it is the closest relative.  The phrase I hear a lot is the “next of kin.”  The statute does not use that term but refers to California’s statutes on who inherits when there is no Will and defines who is the closest relative.  If that is you, then you are the entitled person and can sign the affidavit. 

To Whom Do You Present the Affidavit:  If you take the check that you have to your own bank along with the affidavit, you are going to run into difficulty.  They will probably run you through all sorts of circles.  So you want to go back to your uncle’s bank and have them reissue the check in your name (without any reference to the estate or executor or administrator or anything else).  Usually, this affidavit goes to the bank’s legal department to pass judgement on it.  I usually attach a letter from me, detailing the California law on the subject so that whatever junior lawyer who is reviewing the documents can access the correct statutes. 

The Extra Legal Method:  Another possibility which I have never really tried is to simply take the check your uncle’s bank gave you and see if they will open an account in your name with that check.  Then after a few days, just withdraw the money.  I don’t think that that method is totally “legal,” and I don’t know whether the bank would do that or not.