Summary Administration: It's Not for Everyone

In the recent California case of Bonanno v. Connolly, the Court of Appeals for the Second District held that a spouse who waited until after most of a large estate was administered in a probate proceeding was estopped from filing a spousal property petition under Probate Code section 13652. The case didn't lack for drama. Louis Bonanno had a daughter, Jacqueline. Louis had a girlfriend, also named Jacqueline (!). Jean and Louis had been separated for 12 years when he died intestate (without a will) in March 2003. Jean and Louis were in the middle of divorce proceedings at the time of his death. Louis was living with his girlfriend Jacqueline at the time of his death.

Not surprisingly, a big fight ensued. Connolly was appointed administrator of the Louis' estate (although Jean and Louis were still married, Jean was not entitled to priority as administrator because she and Louis were in the middle of a divorce and were not living together when he died). Jean filed a petition claiming that she was entitled to all of the joint tenancy property she held with Louis, and all of his other property. Jean also sought half of the property Louis transferred to girlfriend Jacqueline. Not to be outdone, girlfriend Jacqueline filed a peititon to determine an interest in Louis' estate, based on a palimony claim based on an oral agreement she entered into with Louis about 12 years before he died. Connolly objected to both Jacqueline and Jean's petitions.

The parties resolved their dispute in December 2003 splitting the estate among the three of them. Because of disputes over the language of the settlement agreement, a final agreement was not signed until March 2006. Connolloy administered the estate, paying off creditors and gathering the assets.

Jean, apparently having developed an affinity for the legal system, filed her spousal property petition under Probate Code section 13650 in May 2006. She claimed that she was entitled to summary administration of all the assets of the estate except those distributed to Connolly and Jacqueline under the March 2006 settlement agreement. Estate property disposed of under this summary administration is not considered part of the probate estate, and is not included in the calculation of statutory administrator or attorney fees. If granted, Connolly's (and her attorney's) fees would be reduced from $58,000 to about $23,000 each. For three years' work.

The court of appeals held that Jean was estopped from seeking summary administration under Probate Code section 13650. Most of the administration of the estate had already occurred: assets had been gathered, creditors notified and paid. It would be inequitable for Jean to get all the advantages of a full probate administration without having to pay the fees of a probate administration.

There are some good nuggets to take away from this case:

• Don't assume you know what the size of an estate is before it has been inventoried. Many clients come to me and say "what do we need to go through probate for? Grandma didn't have any money." The original estimate of Louis' estate was $600,000, but after the administratory, Connolly discovered that his estate was greater that $4 million! This included many assets and real estate no one knew about.
• A probate administration can take forever. Louis died in March 2003. This appellate court decision was filed in July 2008. Five years and four months is a long time to wait for your inheritance. And your attorney fee.
• Summary administration is not always the best way to go. Although it may save time, you cannot take advantage of some of the protections of a full probate administration - most notably the notice to creditors. In a probate, once notice to creditors has been sent, they have generally about four months to file a claim. After that four months has passed, the creditors are out of luck. No such mechanism exists under a summary administration. There is no time limit to when a creditor can file a claim, and a surviving spouse can be personally liable for the decedent's debts chargeable against the estate.