What is probate exactly?
Probate is the term used to describe the legal process that occurs upon a person’s death. Probate can involve many different matters handled by the county court where the decedent resided. These matters include:
- Proving that a deceased person’s last will is authentic and valid (for the sake of the deceased person’s family members and loved ones)
- Identifying and cataloging the deceased person’s assets and/or property
- Appraising the property of the deceased person
- Handling and paying of taxes and debts
- Distributing of property as stated in the will of the deceased person
- If there is no will, distribution is set by state law.
This process can take anywhere from several months to several years, and during this time there may be court and attorney’s fees to deal with. If there is a legal battle over the distribution of assets, the probate process can take even longer. With the proper preparation and planning, however, probate isn’t necessary and often avoidable.
The basics of the probate process
The probate process is initiated when a person dies and someone comes forward to start the process with the court. If a person passes away and leaves a will, then usually the will names an executor, a person who has the legal responsibility of taking care of the deceased person’s remaining affairs and financial responsibilities, such as paying debts and distributing property. The executor named in a will is usually the person who starts the probate process.
If a person passes away without a will, or if the person named to be executor is unable to perform his/her duty, then usually a family member of the decedent petitions the court to be appointed the administrator of the deceased person’s estate. The “executor” and “administrator” essentially have the same responsibilities in probate court.
In the event that there is no will to dictate the distribution of a person’s estate, the probate court will distribute the assets according to state law. Probate can be a lengthy and expensive process, especially if there is family conflict over the distribution of assets.
The executor’s job in probate
If a will has named an executor, the first step the executor must take is to file the will alongside a Petition for Probate of Will and for Letters Testamentary with the probate court. Alternatively, if there is no will, the person who wants to be the administrator of the estate files a Petition for Letters of Administration. The location of the probate court where the executor should file is determined by the county in which the deceased person resided.
According to Los Angeles County’s Civil Fee Schedule (Code Section GC 70650a), filing a Petition for Probate costs $435. In addition to filing this petition with the will, the executor has to present the court with a list of the deceased person’s properties, debts, and heirs. This allows the court to establish the validity of the will and confirm your role as executor. At this stage, the court issues the “Letters Testamentary” or “Letters of Administration” to grant the executor or administrator legal authority over the decedent’s estate. Relatives and creditors are notified of the probated estate and the executor can begin to secure and manage the deceased person’s assets. This process can take anywhere from 6 months to a year, depending on the size of the estate and whether there is conflict over distribution.
How do I avoid probate?
Having a living trust helps you provide for your loved ones even if you pass away while also saving your family from the stress and expense of dealing with probate. While having a will is a good idea, it is still subject to probate upon your death, while a living trust is not.
In California, there are several common and effective ways to avoid probate when it comes to passing on property or assets:
- If you have a Revocable Living Trust, your assets and properties are held in a trust that someone you name can manage as a trustee upon your death. Trust property is not considered a part of your probate estate.
- If you have joint ownership of your property (usually through joint tenancy or community property, both with rights of survivorship), then the portion of the property you own automatically passes to the surviving owner(s) when you die, without having to pass through probate.
- If the value of the property is $150,000 or less, then probate is not legally required and all that’s necessary is a simple title transfer of the property, usually to the surviving spouse
- If you have filed a Revocable Transfer-on-Death Deed in California, you can name someone to inherit your property upon your death while avoiding probate.
- If you have Transfer-on-Death (TOD) or Payable-on-Death (POD) accounts, you can name a beneficiary to receive the funds in case you pass away. TOD/POD accounts can take the form of bank checking accounts, bank savings accounts, investment accounts, retirement accounts, or vehicle titles. TOD/POD designations may override the wishes stated in your will, so it would be wise to keep track of your estate plan.
While probate can be avoided with the options listed above, they may not be perfect for everyone. Issues such as estate taxes, gift taxes, outstanding debts, and predeceased beneficiaries can all affect your plans to help your loved ones avoid probate.
The Risks of Not Having an Estate Plan
Do I need a probate attorney?
Probate in California is largely paperwork-related. Any reasonably organized and informed person should be able to handle the paperwork process to be officially appointed by the court as an executor (if there is a will) or as an administrator (if there is no will). If you want to handle the probate process without an attorney, California’s Judicial Branch website has a database of Forms & Rules where you can find required probate paperwork.
But the average person does not have experience dealing with courts and paperwork filled with legalese. And in your time of grief, dealing with probate can be overwhelming. Consulting a probate attorney can be a good idea, especially since a probate attorney can handle all the probate paperwork and court appearances that are part of the process. In the end, the need for a probate attorney is a decision that families can make together.
How much does probate cost in California?
California is one of only seven states where probate attorneys have the option of charging a “statutory fee” for probate matters. This fee structure is commonly used in place of hourly or flat rates.
What is the probate statutory or percentage fee?
It’s the fee that lawyers are allowed to charge when handling probate matters for a client. The fee is determined by a tiered structure based on the gross value of the assets being probated. Here is a quick breakdown how an attorney can charge the percentage fee:
- 4% of the first $100,000 (gross value of the estate at the time of death)
- 3% of the next $100,000
- 2% of the next $800,000
- 1% of the next $9 million
- 0.5% of the next $15 million
As you can see, probate attorney’s fees can add up quickly! Here’s a realistic example: Let’s say Bob has died and his estate is being probated. Bob owned a house worth $500,000 (at the time of death), a checking and savings account worth $75,000, and a car worth $25,000. The total value of his estate is $600,000. Even though Bob only had $100,000 left on the mortgage for the house, the lawyer’s fee would still be based on the market value of the house, not the mortgage.
If Bob’s family hired a probate attorney, they would likely owe the attorney at least $15,000 in fees. How? Here’s a breakdown of the attorney’s fees:
- Total value of the estate = $600,000
- 4% of the first $100,000 = $4,000
- 3% of the next $100,000 = $3,000
- 2% of the remaining $400,000 = $8,000
- Total attorney’s fees for probate =
$4,000 + $3,000 + $8,000 = $15,000
Here’s an easy-to-use online calculator for attorney’s probate fees.
Avoid probate with estate planning
Now that you have a general idea of the time, cost, and lack of control that is associated with the probate process, you may be considering the importance of an estate plan.
Even having a will drafted is better than leaving your assets to be frozen by the court and distributed as the law sees fit.
Using tools such as living trusts will give you peace of mind and help your family avoid the stress and expense of probate court.
Planning for death and disability is not fun, but wouldn’t you rather have a plan for your loved ones instead of letting them sort it all out when you’re gone?
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