Probate is a court proceeding that is used to wind up a person’s legal and financial affairs after death. In California, probate proceedings are conducted in the county in which the decedent lived, and can take at least eight months and sometimes as long as several years to complete.
WHEN IS PROBATE REQUIRED?
In California, if you die with a gross estate of more than $100,000 your estate will have to go through probate. When calculating the value of your gross estate, do not court assets that have a surviving joint owner on the title or have a beneficiary named. After taking those assets out of the calculation, add up all of your other assets and if the total is more than $100,000, without subtracting debts, the estate be subject to probate.
WHAT HAPPENS DURING A PROBATE?
A will typically nominates an executor to be in charge of administering the estate. To get started, the person who is nominated in the will as executor files a petition with the Court asking that he or she be appointed as executor. If there is no will, the Probate Code provides a list of persons who have priority to petition to become administrator. The will also is filed with the petition, and notices are sent to the heirs and/or relatives to let them know when the hearing will be held. If there are objections to the petition, or if the validity of the will is contested, the hearing will be used to resolve any problems that have arisen. In some cases, this may mean that the validity of the will is not upheld, or that some other person than the original petitioner is chosen to administer the estate. In most cases, however, there is no objection and the petition is granted.
Once appointed, the executor can move forward with the administration by making an inventory of the estate’s assets, locating creditors, paying bills, filing tax returns, and managing the estate assets. When all of the duties of the executor are completed, an accounting is filed with the court asking that the estate be distributed to the heirs. If this accounting is granted, the estate administrated is completed by distributing the assets to the heirs and filing final tax returns.
HOW MUCH DOES PROBATE COST?
The California Probate Code sets the structure for calculating the statutory fees that attorneys can charge for a probate. Higher fees can be ordered by a court for more complicated cases. The fees are four percent of the first $100,000 of the estate, three percent of the next $100,000, two percent of the next $800,000, one percent of the next $9,000,000, and one-half percent of the next $15,000,000. For estates larger than $25,000,000, the court will determine the fee for the amount that is greater than $25,000,000.
The fees listed are available to both the attorney for the executor and the executor. The fee is calculated based on the value of the estate which is determined, in general, by the inventory for the estate. Debts are not included in determining attorney’s fees, and if a house is appraised at $1,000,000, for example, and it has a mortgage of $800,000, it is still considered a $1,000,000 asset for the purpose of calculating fees.
There are other fees that must be paid for probate of an estate. There is a filing fee that must be paid to the court. The fee charged to file a probate petition is $395, but may be slightly higher in some counties due to surcharges. There will be an additional $395 filing fee when the petition for final distribution is filed. There are other fees for publication of the probate notice, for the probate referee, and for certification of copies of court documents.
FEES CAN GO SIGNIFICANTLY HIGHER
In probates that are complicated by lawsuits or tax problems or a variety of other circumstances, the attorney and executor can ask the judge to approve fees that are higher than those set by state law.
APPRAISAL OF THE ESTATE
Estates are appraised as of the date of death of the decedent, partially by the executor and partially by probate referees, who are appointed by the State Controller to determine the fair market value of the asset. Who does the appraisal depends on the type of asset. Probate referees receive a fee based on .1 percent of the assets that have been appraised.
ADVANTAGES OF PROBATE
If an estate is subject to probate, it is probably because the deceased person either didn’t do an estate plan or only had a will in effect at the time of his or her death. But this is not always the case, some clients like the idea that the proceedings are controlled by a judge, who can decide disputes between heirs or between the heirs and the executor. In addition, creditors are required to submit their claims against the estate within a four-month period, provided they have been notified of the probate. If they don’t submit their claim properly, they will not be able to recover on the debt. The executor is required, in most cases, to prepare an accounting and report of the executor’s activities to the court and get the court’s approval of the actions they have taken. This adds a level of protection for the beneficiaries.
DISADVANTAGES OF PROBATE
The cost of probate is usually much higher than would be required for the administration of a living trust for an estate valued at the same amount. It usually takes longer to probate an estate than to administer a trust. Because the estate is handled through the courts, it is a public process and anyone can go to the court and review the information on file in your case. Most estates don’t need the supervision of the court unless disputes occur.
HOW WE CAN HELP YOU – IF YOU ARE THE EXECUTOR
As your attorneys, our job is to assist you in carrying out your duties as Executor. We will help you prepare and file all of the necessary court documents and maneuver through the legal system with ease. We will assist you in collecting and valuing assets, paying debts and taxes, and prepare the necessary transfer documents in connection with the eventual distribution of the estate to the appropriate beneficiaries. We will help you identify the creditors and negotiate any claims against the estate. We will prepare the court accountings and reports and assist you in bringing the estate to a close in the most efficient way possible.
HOW WE CAN HELP YOU – IF YOU ARE A BENEFICIARY
If you are a beneficiary, you have rights. The exact nature of those rights is governed by the California Probate Code and the specific language in the will, if any. If you feel that the executor is not performing their fiduciary duties, we can assist you in enforcing your rights and assist you in moving toward a resolution