What is the IAEA?
The California Independent Administration of Estates Act (IAEA) is a piece of legislation under the California Probate Code. The IAEA grants a personal representative (PR) or executor the authority to administer most matters regarding the estate without court supervision. By reducing court involvement, the act eliminates delays, streamlining the probate administration process.
The decedent’s will can grant authority of the personal representative to administer an estate under the IAEA. The court can also grant the authority to manage the estate upon request by the PR in the Petition for Probate or at any time during the proceedings.
A PR cannot administer an estate under the IAEA if the will or testament prohibits it. An interested person can also provide a court-approved reason why the PR should not have the authority to administer the estate under the IAEA.
Full Authority and Limited Authority to Administer an Estate Under the IAEA
Estate administration begins after the court issues the letters of administration or letters testamentary, which grants the PR’s authority level.
With full authority, the PR administers the estate independently. In other words, the representative has the granted authority to sell real estate, distribute assets, or obtain a secured loan without court approval.
A PR with limited authority has the discretion to administer the estate under IAEA terms but requires court supervision to:
- Sell the estate’s real property
- Exchange or extend an option to buy real property in the estate
If the PR has full authority to administer the estate, they may be subject to questioning in court by the beneficiaries at a later stage. However, full authority allows the representative to administer the estate without delays.
Selling Real Estate
Full authority is generally necessary if there is a real estate sale. A PR acting independently can appoint a real estate agent, list the property, and close escrow within a reasonable period. The PR need not approach the court for confirmation of every step, thus mitigating the risk of losing a buyer.
The PR has a legal obligation to maximize the estate assets’ value. However, under full authority, the law requiring the price to be 90% or more of the appraisal doesn’t apply.
When a PR has limited authority, a judge supervises the probate proceedings. The PR must obtain an appraisal of the property and list it at the appraised price. After receiving offers, the PR will need to schedule a hearing date in court. On this date, all buyers will be present and the court will sell the property like an auction.
A supervised probate proceeding can take a long time and may reduce the estate asset’s price. On the other hand, with the independent power to sell real property, the PR is more likely to get the highest price.
One of the simplest ways for a PR to get full authority is to post a surety bond. The PR can also ask all heirs to waive the bond requirement. If there is no real property in the estate, full authority may not be necessary.
Notice to Sell Property
In some cases, a notice of proposed action must be filed with the court 15 days before the PR takes action. One such case is when the PR sells real estate under full authority.
The PR must issue the notice of proposed action to individuals and legal entities with an interest in the matter, including:
- All persons with an entitlement according to the will
- All heirs who are entitled to receive assets of someone who died intestate (i.e., without a will)
- All persons who specifically requested notice of proposed action
- The Attorney General if the state is to receive any estate property
The PR must notify all parties of a proposed action by issuing them with a Notice of Proposed Action form, which includes the following:
- The PR’s name and postal address
- The contact details of a person who can provide more information about the action
- A description of the intended action, including a property description, the terms of sale, and the price
- The date of the proposed action
Every person receiving a notice of proposed action can send a written objection to the PR. Any party who objects to the action can file a request with the probate court to prevent the PR from carrying out the action with a restraining order.
Selling Real Property As Quick as Possible
Even with independent powers of administration, it generally takes 15 days to sell real property (since all required parties are given a 15 day period to object to the sale). However, if all the parties consent to the sale of the real property on the terms proposed in the notice of proposed action, then the sale can be completed before the 15 day period is up. The consent form is on page 2 of the notice of proposed action, and so long as all the parties to the probate sign on the consent form, then the sale of the property can take place in a matter of days. Realtors who have cash buyers who would like to close a sale as soon as possible should look to see if the parties to the probate can consent to the sale, in order to close escrow as soon as possible.
Contact Klosek Law Offices
As Sacramento estate attorneys, we can assist you with the legal proceedings to probate a deceased person’s estate. Contact Klosek Law Offices today to schedule an initial consultation at one of our offices in California.
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