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January 23, 2022 By stowelawpllc

AFFIDAVIT LACK OF PROBATE

The Affidavit Lack of Probate (or “No Probate”) is a factual confirmation which supports that the rightful heirs are entitled to their interest in the property after the passing of the Decedent.  In some Washington Counties it may be recognized as a way to clear the Decedent’s name off title. And it may allow for the removal of the deceased person off the County property tax records and a successor listed in her or his place on the Assessor’s tax rolls. And it may be recognized by title insurance companies for purposes of insuring a future sale of the property in lieu of a Probate. However, it does not technically transfer title.

The “Affidavit Lack of Probate” name is deceiving in that it only refers to the absence of a probate in the County where the real estate is located in Washington. When, in fact, the Decedent’s estate may have already been probated in another jurisdiction where he or she was a resident. A common scenario involves a British Columbia (B.C.) resident, for example, who owns a vacation property in Washington. Upon the death of the B.C. property owner it will be necessary to clear title to the Washington property because the Court in B.C. does not have the authority to do so. Whether or not the B.C. property owner had a Will, the Affidavit of Lack of Probate when recorded in the Washington County where the real property is located is intended to avoid a second ancillary probate or a “Resealing” as it is known in B.C.

At the same time, the Affidavit of Lack of Probate may be used when a Washington resident owns real estate in Washington and there may be no need to file a probate. This scenario may involve a smaller estate, or even a larger estate, with Washington property, when there are limited heirs, and no creditors.  When the Affidavit of Lack of Probate is recorded it should avoid a probate in the first place.

And in limited cases, the Affidavit of Lack of Probate is often a recognized way to avoid probate when the Decedent did not have a Trust, Joint Tenancy with Rights of Survivorship, Community Property Agreement or some other non-probate alternative in place.

Once the Affidavit is recorded with the County Auditor, the net effect may be to vest title to the beneficiary named in the Decedent’s Will who declares he or she is the “rightful” or legal heir. If, however, the Decedent did not have a Will, then in order to determine the “rightful” heir(s) look to the Washington Intestacy Statute, RCW 11.04.015, which spells out the order of distribution.

Before recording the Affidavit of Lack of Probate it is important to comply with any U.S. Estate Tax obligations. A U.S. Estate Tax Return may have to be filed. And/or it may be necessary to obtain a transfer clearance certificate from the IRS.  And it is recommended to confirm there is Washington Estate Tax compliance before recording.

It is recommended that the beneficiary(ies) or heir(s) consider buying title insurance if not already in place to insure their vested interest in conjunction with recording the Affidavit of Lack of Probate.

PROS

1. Avoids Probate.
2. May vest title in Washington State Real Estate to the beneficiary(ies) named in the Decedent’s Will, or the “rightful” legal heir(s) if the Decedent died without a Will.
3. Cost effective and less expensive than a Washington probate.
4. Exempt from Washington State Real Estate Excise Tax.
5. Title Companies may insure the interest of the beneficiary(ies) or heir(s) when the Affidavit is recorded.
6. The beneficiary gets a full-stepped up basis for U.S. tax purposes, meaning that he or she assumes the fair market value of the real estate at the date of death in the event of a future sale or transfer.

CONS

1. The Affidavit is not a Personal Representative’s Deed which is the legally recognized way to transfer title in a Probate.                                                                                                                                             

2. The Affidavit is not a judicial determination. There is no Court Order that the Will is formally admitted into Probate or that Intestacy is validly granted when there is no Will, which in either case is the basis of the Affidavit. And there is no appointment of a Personal Representative to administer the estate formally.                                                                                                                                                         

3.  The Affidavit is merely a factual confirmation that the beneficiary(ies) in the Decedent’s Will or the heirs in an Intestacy should be entitled to their interest in the property.

4. The Affidavit may not satisfy the future warranty obligations of a Grantor in subsequent sale of the property by Statutory Warranty Deed, which may result in the Grantor’s liability for breach of warranty of title.

5. When there is a need to file a probate to: (a) access a safe deposit box; (b) deal with creditors and publish Notice of Creditors to impose a shorter time for unknown creditors to respond; (c)  litigate on behalf of the Estate; (d) find heirs whom are not easily identifiable; (e) or for other compelling reasons.       

6. The property is still subject to claims of Creditor’s for the 2 year Statute of Limitation period after the date of passing unless Non-Probate Notice to Creditors is published.                                                     

7. Some Washington Counties do not recognize the Affidavit as a way to transfer title, such as, in King County.

Although the Affidavit Lack of Probate may be a viable alternative, a Probate is legally superior and recommended. While a Probate is more expensive than an Affidavit of Lack of Probate, Washington State has a very efficient and cost friendly probate system in comparison to B.C. and California, for example.

The above list is not exhaustive. There are other pros and cons.

Other non-probate methods should also be considered, including a Trust, Joint Tenancy with Rights of Survivorship, and Tenancy in Common.  I recommend you also read my blog articles about the Transfer on Death Deed (“TODD”) Community Property Agreement, because these non-probate methods may be more advantageous.

The above is not intended to be legal advice but is general information provided as a courtesy.

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Filed Under: Non-Probate Methods, Real Estate

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Canadian Non-U.S. Residents Buying Real Estate in Washington State

  • Buying Real Estate in Washington is different from B.C.
  • Plan before and consider a B.C. Trust or other alternatives to hold title with your B.C. Lawyer, as well as other alternatives in Washington.
  • “Closing” or completion documents are usually prepared by an escrow agent (usually affiliated with a Title Insurance Company), and not by an attorney as in B.C.
  • South of the Border, Title Insurance Companies insure the ”title” and certain matters may or may not be covered. But recognize that it is possible for a property owner to lose property rights by adverse claims over time. So there is often risks in any real estate transaction.
  • In order to reduce the risks, it is recommended that a buyer obtain a survey before completing the purchase of Real Estate in Washington.

Canadian Non-U.S. Residents Selling or Gifting Real Estate in Washington State

  • A sale of U.S. real estate requires the buyer to withhold 15% of the amount realized by the foreign seller on most transactions unless exempted.
  • A sale of U.S. real estate may result in U.S. tax liability to the foreign seller although the tax rate may be reduced by capital gains treatment. Any tax paid in the U.S. may be a credit against taxes owed in Canada.
  • A gift of U.S. real estate is generally not favorable and may result in U.S. tax liability. Non-U.S. residents are generally limited to gifting $15,000 USD per year of U.S. based assets tax free.
ARE YOU EXEMPT?
  • Canadian Non-Residents with US based assets are exempt from US estate tax if the value of the assets is $60,000 USD or less. And in this case, no US Estate Tax Form 706-NA would be required. If the Canadian Non-Resident owned U.S. Real Estate it is recommended a Transfer Certificate be obtained from the IRS before any transfer from the decedent’s estate/ Above $60,000 USD a US estate tax return 706-NA is required to be filed within nine (9) months after the date of death. In order to determine if there would be any US estate tax due, a formula under the US-Canada Tax Treaty kicks in. See US- Canada Tax Treaty link below. Normally, there is no US estate tax if the value of your worldwide assets does not exceed the maximum amount, which is adjusted annually. In 2017, it is about $5.4 Million USD. But if your worldwide assets exceed the formula or the $5.4 Million USD (as adjusted annually) there may be US Estate Tax due (which can be around 40%). And the decedent’s estate should request a transfer certificate from the IRS before the estate transfers any property.
  • Link: U.S.-Canada Tax Treaty
  • Article XXIX B (Taxes Imposed by Reason of Death) of the U.S.-Canada Income Tax Treaty (“Treaty” ) provides special rules that may reduce taxes for U.S. citizen or resident decedents with Canadian property and Canadian residents with U.S. property. These rules were first incorporated into the Treaty under the 1995 Protocol to the Treaty.
  • If the decedent was a Canadian resident but not a U.S. citizen at the time of death, the estate can take a “pro rata” unified credit to compute U.S. estate tax. The pro rata credit under the Canadian treaty is determined by multiplying the exclusion amount available to a U.S. citizen decedent by a fraction of the value of the decedent’s U.S. assets over the value of the decedent’s world-wide assets. A statement invoking the right under the Treaty described above and showing the tax calculation must be attached to Form 706-NA. See paragraph 2 of Article XXIX B of the Treaty.
U.S. GREEN CARD HOLDERS
  • Watch abandoning your Green Card, including by failing to change your address and extended visits abroad for more than 180 days.
  • Watch the Expatriation Tax if you abandon your Green Card after satisfying the 8 of 15 year test.
  • Watch U.S. Estate Tax liability if you remain a Green Card holder indefinitely, and do not naturalize and become a U.S. Citizen. In 2017, a U.S. Citizen is entitled to a unified credit of $5,400,000 USD against U.S. Estate Tax.

Canadian Non-Residents Have Preferred Non-Probate Alternatives
to Transfer Real
Estate in Washington State

  • Washington State has innovative non-probate alternatives to transfer real estate upon death in comparison to B.C.
  • Options include Community Property Agreements between spouses, and Transfer on Death Deeds (“TODD”), which can be used between spouses, children, relatives, or other beneficiaries.
  • Another option includes an Affidavit of No (or Lack of) Probate in Washington, and in effect, transfer ownership to the surviving heirs.
  • And even if a Probate is necessary it is often not as burdensome and expensive as in B.C. While there is a court filing fee in Washington, there are no “probate fees” as in B.C.

Canadian Non-Residents Buying Real Estate in Washington State

  • Buying Real Estate in Washington is different than in B.C.
  • Plan before and consider a B.C. Trust or other alternatives to hold title with your B.C. Lawyer, or other alternatives in Washington.
  • “Closing” or final documents are usually prepared by escrow companies, and not completed by an attorney like in B.C.
  • South of the Border, title companies insure the ”title” and certain matters may or may not be excepted. But it is possible for a property owner to lose his property rights by adverse claims over time.
Canadian Non-Residents Selling

Canadian Non-Residents Selling or Gifting Real Estate
in Washington
State

  • A sale of property may trigger U.S. tax liability but the tax rate may be reduced by capital gains treatment. There is often a withholding on most transactions.
  • Gifting U.S. real estate is generally not favorable and may result in U.S. tax liability.
DISCLAIMER

The articles and information contained on in this website were prepared by Stowe Law PLLC. They are a general statement of the law of the State of Washington. The laws of other states differ from Washington law, and these articles are not intended to describe the law of any state except Washington. The articles and information found on this web site are intended for general informational purposes. They are not legal advice for a reader in any particular legal situation. The only way to obtain legal advice on a particular situation is to consult a licensed attorney. The reader’s use of this website and the information contained herein does not create an attorney-client relationship of any kind with Stowe Law PLLC.

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The BC & Whatcom County Connection

  • Mark understands B.C. and Canadian Culture.
  • Mark, a resident of Point Roberts, WA, has been surrounded by Canadians visiting
    their cottages for many years.
  • Mark’s daughter, born in B.C., plays sports in B.C.
  • Mark enjoys hiking on the Northshore.
  • Mark relishes the views of Mount Baker and the Salish Sea.
  • Mark enjoys walking the family dog, Enzo, in the woods at Point Roberts.
  • Mark is still trying to “successfully” ride his mountain bike down Galbraith Mountain.
  • EDUCATION
  • University of Washington, Seattle, WA                                          1983
  • Bachelor of Arts in Philosophy–Cum Laude, Honorary Distinction, Phi Beta Kappa
  • Phi Delta Theta Fraternity
  • Gonzaga University, Spokane, WA 1986
  • Juris Doctorate
  • AFFILIATIONS
  • Washington State Bar Association, Member.                    1987-present.
  • US District Court, Western District of Washington, Seattle, WA. 1987-present.
  • Certified Player Agent by the National Hockey League Players Association (“NHLPA”). 1996-present.
  • US Tax Court, Washington D.C. 2009-present.
  • Practitioner of Foreign Law, The Law Society of British Columbia 2017-present.
  • INTERESTS  
  • Enjoys Family, Hockey, Baseball, Mountain Biking, Hiking, and Travel.