Andrea Aston

Trust and Estate Planning Attorney

760-758-1565

aaston@trustandestatelawyer.net

BonsallOffice:

River Village Plaza, Suite 704

5256 South Mission Rd

Bonsall, CA 92003

Temecula Office:

Temecula, CA 92592

What Is Probate

What is Probate?

According to Investopedia, leading source of financial content on the web  “A probate is a legal process in which a will is reviewed to determine whether it is valid and authentic. Probate also refers to the general administering of a deceased person's will or the estate of a deceased person without a will.”

 

In layman’s terms,  it’s a process supervised by the Court that distributes a person’s assets after his death.

Why Do People Take Huge Measures To Avoid Probate?

The simple answer is that it ties up property (including money).  In California, going through probate takes at least eight months but for some, it can drag on for several years. While the probate process in the Golden State is not as onerous and complicated as compared to other states, it can get expensive.

 The Process Explained

Probate proceedings are supervised by the Superior Court for the county in which the decedent lived.

Probate with a Will

When a person passes away and has left a will, the person nominated as executor files with the Superior Court that he or she be appointed as executor.  The will is likewise filed with the petition.

 

Heirs and/or relatives are notified that a hearing will be held.  The hearing is used to resolve problems such as objections to the petition or if the validity of the will is to be contested.  For cases that hit a snag, this may mean 2 things:

 

  • Some other person other than the original petitioner is assigned as executor of the estate

  • The validity of the will is not upheld.  In such a case, this will be treated as a probate without a will. (See below for discussion on this)

 

If there are no objections, the petition is granted.

 

The executor has these responsibilities:

 

  • Make an inventory of the estate’s assets

  • Locate creditors

  • Pay bills

  • File tax returns

  • Manage the estate assets

 

Once all these are fulfilled, the executor files another petition with the court asking that the estate be distributed to the heirs. The process is considered complete when the assets are distributed and the final tax returns are filed.

 

Probate Without A Will

A person who died without executing a will is said to have died intestate. In case a will is deemed invalid by the court, it is considered as an intestate estate.

 

In these cases, the decedent’s assets are distributed according to California state laws. The first step is the appointment of an administrator of the estate. The administrator performs several duties, including:

 

  • Receiving of all legal claims against the estate

  • Paying off any outstanding debts

  • Locating legal heirs of the deceased, including

    • Surviving spouse

    • Children

    • Parents

 

The probate court assesses what assets are included in the distribution among legal heirs.  In California, property is divided according to community property laws. Under community property laws, spouses are considered joint property owners.  In other words, the surviving spouse is considered the primary heir.

If the deceased owned separate property and was married at the time of death, the assets are distributed among the spouse and children.

 

If the deceased was unmarried or was widowed at the time of death, assets are divided among any surviving children.  When there are no children, relatives are next considered. The assets become the property of the state when no next of kin are located.

Probate: The Pros and Cons

The Pros

While people would like to avoid the probate process because of the time and cost involved, there are cases when it is a good idea:

 

  • Since proceedings are controlled by a judge in court, disputes between heirs or between heirs and the executor are moderated.

 

  • Creditors are required to submit their claims against the estate within a prescribed period after being notified of the probate. You avoid being chased by creditors years after you have filed the case.

 

  • There is transparency so heirs know how the case is progressing.  Executors are required to prepare accounting and reports of the their activities.

 

The process will definitely take time but a probate ensures that the correct beneficiaries inherit the deceased property.

 

  • For people with no financial resources during their lifetime to undertake estate planning, having the estate bear the costs of the probate process after death may be the only option available.

 

  • Some people want the distribution of their estate made public. Wills are public records and when carried out after a person’s death, the information becomes public knowledge.

The Cons

  • As already mentioned above, going through the probate process is time consuming.  While under the process, assets are tied up and may take a minimum of eight months before they are distributed to the rightful heirs.  In complicated cases, the process can take several years before they are resolved.

 

  • It is costly. The cost involved in a probate process is usually higher versus the cost of administration of a living trust for an estate with the same value.

 

In California, Probate Code section 10810 sets the maximum fees that attorneys can charge for a probate. The fees are:

    • 4% of the first $100,000 of the estate

    • 3% for the next $100,000

    • 2% of the next $800,000

    • 1% of the  next $9,000,000

    • 0.5% of the next $15,000,000

    • Courts determine the fees for estates larger than $25,000,000.

 

Fees can, likewise be ordered by the court for complicated cases.

 

  • For people who would like the settlement of the estate be made private, passing through the probate court would mean that all records are made public.

Avoiding Probate In California

It is possible to avoid the expense and stress of probate.  Through judicious planning, it is possible to lower estate administration costs and lessen frustration for your family.

 

Here are some ways you can avoid probate:

 

Living Trust. You can place your assets into a trust for your benefit while you are alive and then have them transferred to designated beneficiaries upon your death by a chosen representative called a “successor trustee” through a written legal document called a living trust.

 

With a living trust, you are able to avoid going through a probate. This means that assets are distributed to your heirs faster.  The successor trustee pays all your debts, then distribute your assets.

 

Joint Tenancy. A joint tenancy is a special form of ownership by two or more people of the same property. Joint tenants share equal ownership of the property and have the equal right to keep or dispose of the property.  Through the right of survivorship, the surviving joint tenant owns 100% of the property when one of them dies. Assets filed under joint tenancy do not have to pass through probate.

 

Small Estate. Estates of less than $150,000 in value can be exempted from being probated under the California Probate Code. Though there may be cases where the total estate is larger than $150,000, the small estate law can still be applied.

 

The reason for this is that there are assets that are defined as non-probate assets. This includes:

  • Life insurance (unless it was payable to the estate)

  • IRA’s

  • 401K’s

  • Assets under a living trust (as discussed above)

  • Joint tenancy assets (as discussed above)

  • Property that goes outright to a surviving spouse

  • Multiple-party accounts and payable-on-death accounts

  • Salary of up to $15,000

  • Amounts due to the deceased for services in the military

 

The $150,000 is computed by adding up only the probate assets owned by the deceased.

 

To avail of this small estate provision, there cannot be an open probate case. In addition, the executor of the estate must give a written consent to use this process. There is a 40 day waiting period for this process. This is definitely shorter than the minimum 8 month period for a probate process.

 

Spousal Property Petition. If a deceased is survived by a spouse, he/she can file a spousal property petition with the court. This is to change the titles of the assets to the surviving spouse’s ownership. Although this is still considered going through a probate, this is a simplified version. This takes less time and legal fees are definitely lower for this type of petition.

 

This provision can be used when the deceased did not execute a will and the couple owned community property. Or if there is a will and the spouse is the main beneficiary.  

 

There is no limit on the value of property that may be transferred through this method.

 

In conclusion, while there are certainly pros to avoiding the probate process, the benefits may differ on a case to case basis. It may be fine for some estates while others may want to avoid probate at all costs.  


Call 760-758-1565 or email aaston@trustandestatelawyer.net to set up a free consultation for your trust and estate planning needs today.

Tags: Probate, Probate Court, Avoiding Probate, Estate Planning, Probate and Wills, Probate Costs, Probate Pros and Cons