0:03 hello and welcome to trust and Estates weekly I'm your host Kevin bemel and we're here every Monday at 10: a Pacific time to talk about matters related to your own personal Estate Planning and and admin and estate Administration as well as uh for professionals who help other people plan their Estates uh manage their estate Ates administrate appr probate a trust Etc so today I'm going to talk about um
0:38 what I described in you know social media posts as the anomalous uh position here in California called a probate referee um if you have one of these in in another state let me know I I couldn't find um any other state that had that has such a position um it it seems like other states you know rely uh on their uh you know valuation professionals to do their job not now you know to be honest I
1:14 don't know how this uh position um uh came into being here in California um I I I you know the the charitable side of me um it you know would say that well um you know appraisers and other valuation practitioners are in general much more expensive than a probate referee and so maybe this was an attempt by the state of California to save um money in the
1:49 administration of an estate um and and you know like I said that that would be the charitable rationale the uncharitable rationale would be to create this you know Cadre of people who have to you know who have to be chosen by the state so it it it gives the opportunity to S sort of Dole out favors and that sort of thing um again I I I don't know if either of those is is accurate or you know two things can be true at the same time even though they seem to be in opposition but
2:26 at any event um I've mentioned probate referees before and what they are this is essentially a position in California that one applies for takes an exam and then is appointed to and and um you know full disclosure I think 25 years ago or more um I applied to become a probate referee um I I think I took the exam as I recall um because uh originally it was
3:02 scheduled on a Saturday and and I observe a traditional Jewish sabbath so I I couldn't uh take the exam on a Saturday so um I I it I got special permission to take it on on a Tuesday or something um but the long and the short of it was I did not receive an appointment don't know why never asked didn't think I would get an answer even if I did um but um in in in retrospect it was it was a good thing that I didn't get it because um it's it's it it wasn't the sort of work I think I would have uh en enjoyed um so I'm going to talk about
3:42 um the proc well actually you know I'll talk about the process of becoming a probate referee first so I'm going to go ahead and share my screen here and here is the um uh the section uh for the state or the the website for the State of California that deals with probate referees now you will note that the the the process um takes place through the California State controller's office the the controller is the person who deals with money for
4:17 the State of California why the probate referees are you know appointed through the controller's office again who who who knows um but in any way um in any event um they are appointed through the state controller's office but they work essentially within the the probate court system okay and so um like if we click here on this you'll see here's a whole there's a list by County okay of probate referees and you know here they all are
4:53 um and I'm going to go to the ones for Los Angeles just to to show you something that I think is a little bit interesting okay so this is Los Angeles Central okay now here's you know uh Christina asedo she works in Sierra Madre okay no no big deal here's Brian ansen works you know on in in Tarzana again you know I think just your you know kind of your typical um individual here's Steven bethl his office is in the US Bank Tower in downtown Los Angeles
5:30 those are pretty expensive digs uh I you know I don't know well you can see his email here is Frasier Capital so you know he um has some other you know pretty big things going on it would appear so you can see that probate referees run the gamut um here right here this one for Brian ansen ansen probe ref that appears that that you know that is what he does he he's a probate referee um and and doesn't have anything else he does so
6:05 you know if you just scroll down these you'll you'll kind of get a feeling um for them most uh you know I think are individual practitioners um you know some are not too like this this person Morris main mainstain is not too far his office is not too far from me Irving rightman okay so they're they're in the same um building interestingly enough in the same Suite I think Irving rifman is is also an accountant if if memory serves so you can get an idea of of what the uh you know background are of of these
6:41 folks there's not a lot of them um you know here in Los angelist it looks like there's about maybe 10 or 15 something like that okay so so that's you know in terms of uh people that's who they are now you can see that the probate referee has to take an examination they have to make an application we'll just look at the application you can see it's a four-page application um they ask you all kinds of questions um entrance requirements possession of a bachelor's degree in any field plus 30 hours in appraisal and
7:18 valuation classes okay at least 2,000 hours of experience within the last four years appraising real Andor personal property now that's a lot when you consider even if someone is working uh 40 hours a week okay times 50 hours okay well that that you know that would be one year of full-time appraisal um practice but you know most most appraisers um who run their own practices they're not actually appraising property you know literally
7:54 40 hours a week probably more like 20 or 30 right so you're really talking about this is time that you accumulate over uh probably at least a couple of years if not more okay certification is an appraiser by the California office of real estate appraisers the appraisal Institute the American Society of appraisers um these are so the first one is is an actual license they call this certification um because there are different levels of of appraisal licenses one is a license um which allows you only to do um smaller
8:30 residential transactions and then you have a a general certified which allows you to appraise any kind of real estate and a residential certified which allows you essentially to appraise most types of residential real estate okay the appraisal Institute or the American Society of appraisers they have certifications these are private organizations the the qualifications to get them are quite rigorous okay now if you're an attorney with a minimum of three years is as a member of the California State Bar you you will evidently automatically qualify and a certified public accountant with three
9:06 years as a CPA again you automatic you evidently you automatically qualify so then you have to provide um uh references five of them okay and here's your education High School Etc business correspondence trade service schools okay and then here's your experience okay and and um then they ask you to attach um details about your background including the appraisal of various types of real estate um tangible
9:41 and intangible personal property and then um you have to um uh if you have any experience in Probate procedure and practice or community property law presumably this applies to lawyers you do that okay and then finally um have you ever acted as an expert witness or participated in hearings where testimonies taken etc etc okay pasted or Current public offices okay uh and um you know here's um do you have any conflicts of interests or business
10:16 activities that would preclude you from certain types of appraisals and um uh would you disqualify yourself if there was a conflict of interest when you were appointed as a probate referee I would advise answering yes because I think if you answer no they're gonna they're gonna say okay well this person is is is out but anyway so this this is the application um that you have to file and then um you take a an exam okay and this this gives you this repeats the qualifications here um and then it it it shows you like this year Applications
10:53 had have been received by March 1st of 2024 and the exam is was taken on either either March 16th or or March 17th 18 19th there were four days um and then you you have to have your um all your references have to be in by March 1st Etc so there's there's an annual cycle um to apply for for this role okay and then um now you can supply all that stuff but that doesn't
11:30 guarantee that you will be appointed okay that that depends on you know the process that the state controller's office has honestly I don't know what that process is I'm not aware of um any um you know public hearings about it or anything like that um but in any event uh you know that is essentially uh you know the process so um that's how you become a probate referee now you know if you're in a I I
12:05 know for a lot of appraisers business is is kind of slow these days um it considerably slower over the last 12 to 18 months than it was for many years prior to that where they were so busy I know appraisers have been cutting their fees and so it may be a viable alternative for you to apply to become a probate referee especially if you're in a jurisdiction that or a county I should say that has very few probate referees so that might be a good adjunct to your
12:40 business now do keep in mind many of these probate referees serve for literally decades they're very entrenched and and so um they they may very well take umbrage if you decide to challenge what they View as you know their purview so I don't know if you noticed Len County I think had one probate referee now there may not be that much work in Lassen County so there don't need a second one but in any event I I would you know I would say that it's it's definitely
13:15 something to look into now in terms of fees you get one tenth of 1% of the appraised value of whatever it is you appraise now probate referees are not Specialists they are generalists so if an estate has real estate a business maybe artwork coin collections whatever it is the probate referee values all of those assets okay
13:50 so uh you really need to have that kind of generalist ability I know in my real estate appraisal career while I started out appraising houses I um soon after that got into appraising commercial property um industrial uh property commercial land um apartment buildings and then I got into all kinds of weird stuff things like mineral processing facilities and casinos and those kind of things but also one of my clients asked me to appraise some small businesses so
14:27 I I had to learn how to do that in order to serve that client and then I had another client who needed to know what some cars were worth now fortunately by that time I was sharing offices with a um machinery and equipment appraisal company and so I was able to talk to my friends there uh to get their input on how to do some of these things I mean in the end it's not so different appraising a bulldozzer than it is you know a Jaguar um and so if you have a
15:03 background in appraising I I I would say it's not too difficult to learn to competently appraise other types of properties the principles are essentially the same you value property either by the comparison approach where you look at what other similar property has sold for and make adjustments for the property that you're appraising whether it's a car whe whether it's a piece of art whether it's a piece of real estate whatever although art can be more difficult because there isn't the
15:38 the level of comparability is is very difficult to assess but for for more um commoditized um property like cars e even even horses um other types of uh you know um other types of fancy livestock uh comic books like said coins all of these are appraised by comparison approach essentially um I know for coins for example there are cataloges that you refer to I've done some coin appraisals uh you know in in in my in my time so
16:15 you can learn how to do these things um you know there are there are competency issues and you need to make sure that you are indeed competent but as long as you are make proper disclosure me es um you're you're good to go so I mentioned the fee that you get is onet of 1% of the appraised value now for anybody who's done professional appraising that sounds very strange because appraisal standards and ethics prohibit calculating fees on the basis of appraised value um but as a probate
16:51 referee you're required to do so um so uh probate referee valuations do not fully comply with What's called usap the uniform standards of professional appraisal practice but because you you must comply with the law you can charge your fees that way even though you're a you know certified appraisal another appraiser a licensed appraiser um and you have a certification from the appraisal Institute maybe you're an Mai member appraisal Institute or um I I don't
17:26 recall what the uh designations are through the Society of real estate appraisers um but in any event um because the law requires you to calculate your fees that way you do now you'll you'll quickly notice that if you appraise a million dooll property your fee is ,000 okay one tenth of 1% of a million dollars that's lower than a typical appraisal fee would be okay so even to appraise a million doll house these days
18:02 um unless it's kind of a like here in Los Angeles where you know a million dollar house could be a tracked house so that appraisal maybe you are only going to charge $1,000 do for that but in in a jurisdiction outside of you know very expensive locations like you know West Los Angeles Etc the you know an appraisal for a million dollar property is probably going to be more expensive than $1,000 okay now one of the reasons is because or one of the reasons the fees can be lower and you can still do well as a referee probate referee is the the kind
18:39 of reports you have to write are not nearly as extensive as those required under use and so your time is spent figuring out values um but um you're really you're you're not writing you know extensive narrative reports and that kind of thing um and and so um you know you don't really have to worry about it and indeed even if you're using the forms that are common for homes you're probably not filling in a lot of the sort of background information about the market Etc um it's it's you know you're there
19:16 just to to give the number uh so um you know it really it really depends on your practice but um you know you might be able to do well um you know even even with fees and especially these days by the way so appraisal fees are lower now as I mentioned than they were even 12 or 18 months ago so you know on Tenth of 1% might be more in line with typical appraisal fees today than it was um you know back in say you know 2019 2020 something like that all right so
19:52 what are you going to do as a probate referee so the main thing is is what I've been saying you're going to appraise Assets Now typically um when you're a probate referee you you will be appointed by the Probate Court um to handle a particular estate okay now there are other situations where you may be engaged by uh litigant in a case for example in a family law case where you're you're
20:27 engaged Essen directly by the litigant to do something but the vast majority of jobs come through um being appointed by the probate court and so you're not going to get to uh generally speaking pick or and choose you know what what engagements you get and what uh range of assets you deal with they they're kind of this is what you got and this is what you do kind of thing okay so um you're going to go through essentially the appraisal process okay okay for whatever types of assets there are okay and and
21:03 and and it's going to be based on the inventory and Appraisal that is submitted generally speaking by the lawyer for the estate typically with the um consultation with who's ever administrating the estate whether it's the executive whether it's an administrator uh you know that will just depend on on the situation by the way if you have property in a trust that is almost always exempt from probate so a probate referee is not going to have
21:38 anything to do with appraising property that is in a a properly constructed trust okay these are for assets going through the probate process going through the court process okay so that's why the the attorney would work with an executive or an administrator but not a trustee except for in some rare case maybe where there's an issue between maybe beneficiaries of of the trust and and they they decide to bring in a probate referee uh to you know help
22:13 settle maybe a dispute or something like that that would be an unusual case all right so um the the the probate referee then provides a report um that lists all the assets and their um respective value and that report is submitted to the Probate Court okay so it's not submitted to um the lawyer for the for the estate it goes to the court the court has jurisdiction over it okay and then that's you know when all is said
22:48 and done that's really what the probate referee does now they have to make sure that the processes they use and and what they submit to the court um complies with you know California law and regulation but you know that that's not going to be very complex and in fact there's there's a a guide um see I think this is it right here I downloaded it uh probate code section 404 controllers uh standards of of training performance and ethics that you
23:23 know that explain the standards this is kind of the use papap version uh for probate referees and then there's something called the probate guide which I think is about aund oh no I'm sorry it's 72 pages but it goes through you know step by step what you need to do um you know for each type of property and and um you know it's it's it's pretty thorough so and and in fact it even gives you a sample inventory and Appraisal form so that you can see what
23:58 it looks like and and how it needs to be filled out that sort of thing okay so it's it's it's not you know it's it for anyone who has experience appraising and and not even necessarily an appraiser you could be a real estate broker for example um but you have a lot of experience in doing broker broker's opinion of opinions of value uh so you're not going to find complying with the rules regulations that difficult you're going to have to read them and it'll take some time but you know like I
24:34 said it's not going to be a difficult thing to do and then look your other responsibilities are to make sure that you know you're accurate in what you're doing that's the bottom line so um you can't be sort of you know pulling appraised values off the top of your head so you know different probate referees I imagine approach this differently but in the end you know you don't want to be in a situation where your values are constantly being challenged and shown to
25:09 be inaccurate okay so now one of the things that affects this whole process is um a probate referee generally speaking is valuing the assets as of the date of death of the you know owner of the property and if you know if the date of death was um in some cases even a few months before and market conditions are changing rapidly so then if some assets are sold uh you know later then those
25:44 the the sales prices of those assets may be different than the value that the probate referee came up with and that's that's understandable because the market conditions have changed so no one is no one is well I shouldn't say no one is expecting people oftentimes expect things that they're not going to get but but the the court is certainly not expecting the probate referee to anticipate changes in the market that's not the probate referees job his job is to um do the valuation like I said as of
26:19 the the date of death of the decedent so when we talk about accuracy we're talking about accuracy as of that date okay and um look often times um some of these values are not going to be easy to come up with I I've mentioned this example before I had a situation where um a fellow died and he left behind a ranch that had a a particular type of horses on the ranch they were a relatively rare breed of horses here in the United States and I
26:55 was doing the real estate valuations for the estate State and the lawyer needed the horses appraise because they were pretty valuable um I think you know in the neighborhood of perhaps even hundreds of thousands of dollars per horse and this is going back 30 years ago so I I offered to find someone who could do uh the the appraisal of the horses for him and at the time um my younger sister and I both were were really big into horse racing and loved hes and all that kind of stuff so you
27:30 know I called around to a few of the people I knew who were Professionals in that area and asked them about you know well I need someone who can appraise this type of horse and they all gave me this the name the same name for the same person and it turned out to be one of the beneficiaries of the estate so the bottom line was these horses were so rare and this particular family was so well known for breeding this particular type of course that was it right so if you were a probate referee you know what would you do well you might confer with with
28:09 the beneficiaries and disclose in your report that look you know my research indicated that the most knowledgeable person about these horses happened to also be the beneficiary or one of the beneficiaries of the estate and therefore I conferred with them and that and I base my values on the information that I obtained from this Source okay you know if someone wants to come along and try and dispute that well okay fine but the reality is the beneficiaries would be the most likely party to dispute a value and if they
28:45 were the ones that gave the information unlikely they're they're going to dispute it so these are the kinds of um you know issues that you'll deal with u potentially as a probate referee so that's that's you know that's really kind of the the extent of it uh like I said it's it's an anomalous position here in Cal that we have here in California and uh but but it is an opportunity to to be involved um in in the probate process in a way perhaps
29:21 that you didn't consider before now with respect to your own estate if you point point uh you know someone to be your executive who maybe is is not particularly familiar with you know valuation issues so just know that if your estate is going through probate your executive essentially is going to is going to be relying on a probate referee to handle that aspect of the estate for him and so okay so good you know don't have to worry about that now if you're if you have a trust so then
29:57 your truste generally speaking are not going to be looking to appr probate referee but but they can you know they they could apply to do so um probably not the best way to go but they could okay so but it's still good for you to know that this position is around and available as as as a resource all right so you know that's kind of the ABC's of probate referees I think it's important for us to know about them uh to now so that's that's the show for today tomorrow on business lessons from the military um we're
30:34 starting later than normal so it's um the show is going to be at noon Pacific time tomorrow 3 pm on the East Coast normally we're at 10: am all our shows uh tomorrow is a special thing I I have a conflict at 10: am and I I didn't want to pre-record the show I I much prefer to do them live and so tomorrow's show I'm going to be talking about a very well-known officer in the British army field Marshal Lord waval who very early in World War II was fired and yet I
31:13 there's lots of lessons we can learn from his career because despite being fired he went on to have a triumphant uh career I think it's it's you know reasonable to say and so I'm talk about Lord waval and how how that worked out for him and uh as an example that we can follow in in the business world and then on Wednesday at 10:00 am Pacific time I postponed last week's show to this Wednesday so we're going to be talking about economic Echoes how the
31:49 changes in the economy affect us as individuals and then on Thursday you're saying wait what Thursday you don't have a show on Thursday yes the first episode of jigger's place will be this Thursday at 5 p.m Pacific time so this is an afternoon show that's designed to give us an opportunity to relax have a little bit of fun as we Ease on into the weekend so I'm going to be mixing up a cocktail called the horse feathers and talking about one of the
32:27 iconic individuals from the Golden Age of Hollywood a man by the name of Irving falberg now if you ever watch the Academy Awards you're familiar with that name because there is a a humanitarian award that's given out periodically at the Oscars and it's named after Irving falberg so that gives you a little bit of an idea of who this man was so we'll be talking about him for about a half an hour well about less than half an hour because I'm going to mix up the cocktail first so thank you very much for joining
33:03 me this today wishing you a wonderful rest of the day and signing off as I always do Marie you're my bell darling courage at all times my