What is probate?

Probate Stamp

What is Probate?

Probate is the court-supervised process of distributing a deceased person’s assets according to their will or California intestacy law. The process is initiated by the executor of the will, and it allows the executor to take control of your property and distribute it according to the provisions of the will. If the deceased person died intestate (without a will), a family member or heir may initiate this process.

After the executor named in your will (or appointed personal representative) has initiated the probate process, he or she then takes charge of your assets, pays your debts and, upon court approval, distributes the rest of your estate to your beneficiaries. It is not uncommon for the probate procedure to take several years based on the county. 

The probate process has advantages and disadvantages. One advantage of the probate process is that the probate court is designed to quickly resolve disputes regarding the distribution of assets through a well-defined process. Also, the probate court reviews the executor’s or administrator’s handling of each estate, which further protects the beneficiaries’ interests.

One major disadvantage is that the probate process lacks confidentiality. Probate makes your estate plan, and the value of your assets, part of the public record. This means that any member of the public can gain access to these records and the information they contain.

Another disadvantage is that because lawyer’s fees and executor’s commissions are based on a statutory fee schedule, probating a will may cost more than the management and distribution under a living trust. Also, probate proceedings generally take longer than the administration of a living trust.

Cost of Probate

The personal administrator/executor, i.e., the person appointed by the judge to be in charge of administration of the estate is entitled to a fee. Any attorney hired by that administrator/executor is also entitled to a fee. The costs of these fees are set by state statute.

Between the attorney and court costs, expenses may amount up tp 5% of the typical estate. It all depends on the value of the probate estate, i.e. assets subject to probate. For example, if an estate is worth $500,000.00, both the administrator and the administrator’s attorney would receive 4% on the first $100,000.00, 3% of the next $100,000.00, and 2% of the next $800,000.00. (Cal. Prob. Code Section 10800, 10810.) This means a total of $26,000 for these fees alone, not to mention the cost of administration through payment of debts, court fees, realtor fees (through a real property sale), etc.

How long does Probate Take?

On average in Los Angeles County Superior Court alone, the probate process may take at least 12 months, and often times, more. What can cause it to go longer? Court calendars. There are only so many judges compared to the amount of court filings. There are also statutory requirements that cause a certain amount of time to pass before certain tasks can be done.

Also, if there are disagreements among heirs and/or with creditors, this can drag out the process and cause the assets of the estate to go towards paying litigation fees. Further, individuals trying to go through the probate process without an attorney find themselves unaware of the procedural rules and requirements which only add to the delay.

Keep in mind, assets in probate often cannot be accessed or utilized by the beneficiaries during probate. This is one of those often overlooked, but potentially devastating effects of probate.

Who must go through Probate?

Not everyone has to go through the probate process. It generally depends on the value of the estate at the time of death as well what estate plan is or is not set up. It varies by the state in which the person lived, but there is usually a minimum amount. In California, if your assets subject to probate do not exceed $166,250 (both real and personal property) then probate can be avoided. (Cal. Prob. Code Section 13100, et seq.) Assets not subject to probate are those with named, living beneficiaries, such as a payable on death bank account or assets properly funded into a Trust.

Therefore, avoiding probate is not just an issue for the wealthy. In fact, just owning a home in California will exceed the minimum and require the estate to file for probate.

What About Wills?

In California, if you have a Will (but not a Trust), your estate must still be administered through probate court if the full value of your assets exceed $166,250 (both real and personal property), excluding assets that have named, living beneficiaries.

Even those with Trusts may find their estate in probate court after their death if an asset (worth over $166,250) is not titled in the name of the Trust and/or does not properly designate a beneficiary. This depends on the asset. It is not uncommon for a Trustee to discover that a house was not transferred into the name of their deceased loved one’s Trust. At such time, if a Pour Over Will was also executed with the Trust, the Trustee can request an order from the Court transferring the floating asset to the Trust so that it can continue to be administered through the Trust and, thus, avoid a full probate administration.

Call our office today to speak with one of our attorneys.

Nothing in this article should be construed as legal advice. For specific guidance regarding your situation, please contact an attorney.