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When someone passes away, their assets cannot be distributed in many cases until after the estate goes through the probate process whether the decedent has a will or not. Probate can be a lengthy process, so it can help to understand the basics of what to expect if you’re the executor of an estate or when you’re creating your estate planning documents.
Probate is a legal process that occurs through the court. The will and other documents are filed so that the decedent’s wishes can be confirmed and carried out without too much issue in the majority of cases. The executor or probate litigation lawyer will be responsible for filing paperwork and performing other duties in a timely manner to ensure that the decedent’s debts are paid and beneficiaries receive their share of an estate.
Although the state of California generally prefers that the probate process is completed within a year, there are cases where this time can be extended if the estate ends up being very complex. However, the initial probate paperwork needs to be filed within 30 days following the decedent’s passing, either by the executor named in the will or a close family member who wishes to take on the role when there is no will. The court will either accept the named executor or appoint someone to fill that role.
Filing the Petition
The executor or a representative will have to file a notarized petition along with the will, if there is one, and the death certificate. There are fees for submitting and filing these documents with the court. The court will legally assign the executor or another representative as administrator to handle the estate and will determine if the will is valid. It’s worth noting that it’s rare for the court to determine that a will isn’t valid, but it can happen.
The assigned administrator will need to make a list of all heirs and beneficiaries so that these persons can be notified of the decedent’s passing. A notice is also generally published in local newspapers multiple times. This can save a lot of time and effort on the part of the administrator in tracking down and contacting every person individually.
In addition to determining heirs of the estate, the administrator will be required to list all creditors that the decedent owed at the time of death. Although these creditors must be notified in writing of the decedent’s passing, newspaper notices serve to inform those creditors who may not be known to the administrator when he or she is going through the decedent’s estate. Creditors have four months to let the court know of the decedent’s debt once probate has begun. The court has the choice to validate these debts for payment or may find them invalid.
Another responsibility of the administrator is to take inventory of all of the decedent’s assets and have them appraised. This inventory of all items and their value must be submitted to the court.
Any applicable assets will then be liquidated to pay creditors, estate taxes, and any taxes owed by the decedent at the time of death. A federal tax return may need to be filed as part of this process as well. It’s the administrator’s duty to complete and file all necessary paperwork and pay the necessary debts and taxes before probate can proceed.
Once these steps are completed, the administrator can then make a request to the court for the estate to be closed. It’s important that the administrator keep accurate records of all assets that have been liquidated and creditor payments to submit to the court at this time. After this request has been approved by the court, the administrator oversees the distribution of remaining assets to beneficiaries and eligible heirs of the estate.
While it is true that all wills must be filed with the court within 30 days of the decedent’s passing, not all estates must pass through the lengthy probate process. Smaller estates or those composed mainly of certain types of assets may go through a simplified process that is less expensive and time consuming.
It might surprise you to know that not every asset has to go through probate. Certain property may be exempt if it’s held jointly with specific wording that the property passes to the other party or parties upon death. Additionally, assets that are placed into a living trust are generally exempt from probate, so it could be beneficial to create this type of document for larger estates.
How it Works: Instead of solely relying on a will, you can transfer the title of your assets to a revocable living trust. While you’re alive, you retain control of the assets and can change the trust as you see fit.
Benefits: Assets in a revocable living trust bypass probate. Upon your death, the successor trustee (whom you’ve appointed) can distribute the assets according to the trust’s terms without court intervention.
Joint Tenancy: Property owned in joint tenancy automatically transfers to the surviving owner(s) upon the death of one owner.
Community Property with Right of Survivorship: For married couples, this is a special form of joint ownership in California where assets pass directly to the surviving spouse without probate.
Bank Accounts: California allows for POD designations on bank accounts. Upon your death, the funds in the account pass directly to the designated beneficiary without probate.
Certificates of Deposit & Savings Bonds: These can also have POD beneficiaries in California.
How it Works: California law allows for a TOD deed, which lets homeowners designate a beneficiary to inherit their real property upon their death.
Note: The TOD deed must be recorded before the property owner’s death to be effective.
How it Works: Stocks and bonds can be registered in TOD form. When the owner dies, the securities automatically transfer to the named beneficiary without going through probate.
How it Works: By gifting assets before you die, you effectively reduce the size of your estate. These assets will not be part of your estate at the time of death and thus will not go through probate.
Note: Be aware of gift tax implications. As of 2023, the federal gift tax exemption is $17,000 per recipient per year according to the IRS (IRS Gift Tax FAQs).
How it Works: Assets in retirement accounts, like IRAs and 401(k)s, typically allow for direct beneficiary designations. Upon death, these assets transfer directly to the named beneficiaries without probate.
How it Works: California offers a simplified probate process for smaller estates, and in some cases, beneficiaries might avoid probate court altogether.
Criteria: As of 2023, if the total value of the decedent’s real and personal property in California does not exceed $184,500, a more straightforward process might be available according to the California Courts (Small Estate Procedures).While these strategies can help avoid probate in California, it’s essential to consider the full implications and potential pitfalls of each method. Some strategies might expose you to other risks or complications. It’s always a good idea to consult with an estate probate attorney in California to devise a comprehensive plan tailored to your unique needs and circumstances.
Any high-value assets may be subject to probate, including real estate, vehicles, bank accounts, stocks and bonds. However, even some of these may be exempt from the probate process if they have some type of payable-on-death designation or if the spouse is the only beneficiary. Unfortunately, even some lower-value items, such as furniture and jewelry, may be subject to probate, so it could help to discuss the matter with an attorney.
Some of the assets that may be exempt from probate are life insurance, pension and IRA benefits that are paid directly to beneficiaries as well as property that is designated as payable on death, transfer on death or community property with right of survivorship to a spouse. Additionally, you can avoid probate for assets that are held in a living trust as long as there are no objections from beneficiaries.
In California, probate can be a costly and time-consuming process. The fees associated with probate are largely set by statute, but there are also other expenses that can arise. Here’s an overview of probate fees and cost implications in California:
In California, the attorney’s fees for ordinary probate services are set by the California Probate Code. They’re calculated as a percentage of the gross estate, which includes almost everything the deceased owned, not considering the deceased’s debts. As of 2023, the fees are as follows:
The executor (or personal representative) is also entitled to compensation, and these fees are set at the same rate as the attorney’s fees. If both an attorney and an executor are involved, you can essentially double the above fees. However, it’s worth noting that a family member serving as the executor might choose to waive or reduce their fee.
The statutory fees only cover “ordinary” services. If an attorney or executor performs tasks outside the scope of regular probate duties, such as selling real estate, defending a will contest, or managing a business, the court can approve additional “extraordinary” fees.
In California, the court appoints a probate referee to appraise most of the property in the estate. The probate referee’s fee is typically 0.1% of the assets appraised (or a minimum fee, which varies). This doesn’t include cash or certain other assets, like some securities.
Probate involves various court costs, including:
Unless the will specifically waives the requirement or all heirs agree to waive it, the executor may need to post a bond. The bond is a type of insurance policy that protects the estate from any losses caused by the executor’s mistakes or misconduct. The cost of this bond depends on the size of the estate and the executor’s creditworthiness.
Other potential costs include:
While not a “fee,” it’s crucial to note that the estate might be liable for federal estate taxes, state estate taxes, or final income taxes for the deceased. While most estates won’t owe federal estate tax due to the high exemption limit of $12.92 million in 2023, according to the IRS (Estate Tax), the estate will need to settle any final income taxes.
According to a study by the Judicial Council of California, probate cases can take anywhere from 9 months to over 1.5 years to complete, depending on the complexity of the estate (Probate Case Statistics).Given the potential costs and time associated with probate in California, many individuals opt to plan their estates in ways that avoid probate, such as using living trusts. If you’re navigating the probate process or planning your estate, consulting with a knowledgeable California probate lawyer can provide clarity on fees and potential strategies to reduce costs
While smaller, simple estates can typically be handled solely by an administrator, it can be beneficial to hire an attorney when going through the probate process to ensure everything is done correctly and on schedule. While the cost of hiring legal assistance will vary based on the attorney and the estate, this has the potential to save money by avoiding loss due to missing an important deadline or filling out the necessary paperwork incorrectly. The more complex an estate, the more an attorney can help with the process.
However, perhaps the best time to hire an attorney is before death in the form of estate planning. A lawyer who specializes in this field can advise and assist with the appropriate documents that your situation may require and can help with setting up deeds and other ownership documents with the proper designation that will keep certain assets from having to go through the probate process and will allow them to go directly to your intended beneficiaries upon your death.
While there are fees for these estate planning services, making a plan ahead of time can be more cost effective than waiting and hiring an attorney to handle an estate once the need for probate arises.