What is probate?

Probate is the legal process which allows the court to supervise the administration and distribution of an individual's estate.  Because of the court supervision, probate is a public process. This means that the will and all supporting documents become accessible to the general public. Furthermore, probate can be an expensive and lengthy process. During probate, the estate funds are inaccessible  for the care of your surviving relatives. 

What is the cost of probate?

Probate can be expensive because of the court supervision and the fees associated with the process. The executor and attorney's fees are statutory. Where the attorney also serves as the executor, he is entitled to be paid for each role. In addition to executor's and attorney's fees, there is a fee for a court- appointed appraiser, a probate publication fee which varies by county, an initial filing fee as well as other miscellaneous and mandatory court costs. A will contest can also drive up the overall cost of probate.

How long does the probate process take?

In California, the administration of probate can take anywhere from 8 months to two years. This time range can increase with the complexity of administering the estate or if there is a will contest. 

What is probate?

Probate is the legal process for wrapping the legal and financial affairs of a decedent dying with or without a will. In California, probate will be conducted in the Probate department of the Superior Court in the County where the individual dies. The rules for probate are determine according to the California Probate Code as well as County-specific probate rules. 


What happens during probate?
 
If the decedent dies with a will, then the executor nominated in the will can file a petition with the Court to have him be appointed as the administrator of the estate. The will is usually filed along with the petition. Absent a will, the Probate Code provides a list of approved individuals who can petition to be administrator. As long as there are no protests by the beneficiaries or heirs, the court will usually approve the petition. 

Once an administrator has been appointed, the individual duties will include, gathering up assets, notifying beneficiaries or heirs of probate, notifying creditors and paying debts, filing tax returns and making distributions of the estate assets.  This entire process is lengthy and can take anywhere from 8 months to several years. 

How much does probate cost?

Section 10800 of the Probate Code sets the maximum amount that the attorney and the personal representative involved in the probate process can be paid. Higher fees can be set by the court for "extraordinary services". Fees are as follows:  4% of first $100K of the estate,3% of the next $100K, 2% on the next $800K, 1% on the next $9 million, .5% on the next $15 million, for amounts above $25 million, a reasonable amount will be set by the court. These fees are paid twice where the executor hires an attorney. Additionally, an attorney serving as the executor can collect fees for both roles. 

To determine the executor's and attorney's for an estate with a particular gross value, click here:


What are the advantages of Probate?

Probate allows for court supervision of the administration of the estate which protects the beneficiaries interests from unscrupulous personal representatives. This is because the personal representatives must get permission from the court before certain actions concerning the estate can be taken. The personal representative must also gain court approval before he can be discharged of his duty.

What are the disadvantages of Probate?

The benefits of probate are also the disadvantages. The court supervision causes the delay in the administration of the estate because the representative must confer with the court before making major decisions concerning the estate. This also why probate is so expensive. Along with the attorneys and executors fees, there are also appraisal fees, filing fees, publication fees and other mandatory court fees associated with probate. All these fees drive up the cost of probate and lessen the inheritance of the beneficiaries. 

Can probate be avoided?

Yes, probate can be avoided in some circumstances. 

Living Trusts/ Revocable Trusts

Assets titled in the name of a living trust are administer according trust provisions and are outside of probate. 

Small Estates Act

Small Estates of $100,000 or less can be administered outside the formal probate process. The beneficiaries can accomplish this by presenting the holder of the personal property with an affidavit, no less than 40 days after the death of the decedent. For the transfer of real property, the beneficiaries must submit an affidavit to the Court, no less than 60 days after the death of the decedent. 

Personal property, real property, life insurance policies and retirement funds are included in the calculation of the $100,000 total gross estate. 

Assets such as mobile homes, commercial coaches, campers, unpaid salary, joint tenancy, life estates or any other property, multiple-party accounts where inter-vivos trust assets are excluded from the calculation of the gross estate. 

Since real property is included in the calculation, owning a house in California will most certainly disqualify you from availing yourself of the Small Estates Act, unless that house is owned as a joint tenancy or titled in a living trust. 

Non-probate Assets


Property held as joint tenants with rights of survivorship or property with payable on death beneficiaries are transfer outside of probate. Owning property in this manner can be an excellent way to avoid probate.  When one joint tenant dies, the surviving joint tenant automatically takes 100% ownership of the property.

The negative side of a joint tenancy is that during the life of both joint tenants, they each own an undivided share of the property. A joint tenant can therefore use  her interest in the joint tenancy as collateral for obtaining debt.  Furthermore, the creditors of any joint tenant can attach the property as payment for debts.  

Joint tenancies are not appropriate for assets that appreciate over time such as residences. This is because of something called the "step up in cost basis rule".  The cost basis of a home is usually the price paid for it including any capital improvements. Such property would typically owe capital gains tax in the event of a gain-producing sale. 

At death, residences receive a step up in cost basis to the fair market value of the property. When the surviving beneficiary receives it, it will have a cost basis of $0. If the beneficiary turns around and sells the property, he is more likely to owe no capital gains tax on the sale. With joint tenancies, the surviving joint tenant does not receive a step up in basis to fair market value at the death of the other joint tenant. The surviving joint tenant in California is therefore more likely to owe capital gains tax at a later sale of the house. This would be the case even after factoring the $250,000 exclusion amount allowed under Federal Law. 

California Spousal Property Petition

In California, a surviving spouse may file a petition to have property administered outside of probate under two circumstances.

Where the surviving spouse is the only beneficiary under the will, all the community, quasi-community and separate property of the estate can be transferred under the petition. Where there are other beneficiaries, a separate probate must be held for those assets being transferred to those beneficiaries.

 In the absence of a will, the community property can be transferred the spouse under the spousal petition. If the deceased spouse owned any separate property, then a full probate may need to be held for the administration of the separate property assets under the Intestacy Statute.

Probate and Non-Probate Transfers

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