Probate

When one dies with a Will, or without a Will, we facilitate the inheritance transfer – whether through Probate, or via Small Estate Administration.

Probate is required when the assets of a decedent exceed $150,000 in gross value, regardless of whether there was a Will, or not. Probate is a very technical, court-supervised, long and complicated process. Hiring an attorney with a lot of Probate experience makes the difference between a protracted and costly Probate, and an expeditious, cost-efficient administration.

Probate is the court-supervised process of either “proving” a decedent’s Last Will, or administering the assets of a deceased person who died without a Will. It involves appointing a legal Representative of the Estate by the Probate Court, as well as locating, valuing, and collecting the assets of the deceased, as well as paying his creditors, settling government debts (MediCal, IRS, FTB), and distributing the remainder of the estate to his rightful heirs.

When a person dies (called “Decedent”) owning assets in his or her name alone, he or she is replaced by a legal entity called the “Estate.” In order for the Decedent’s assets – which are now owned by the Decedent’s Estate – to be passed on to the Heirs, someone has to step in the shoes of the Decedent and administer the Estate through a court-supervised process known as Probate Administration.

• When the Decedent died without a Will, the court has to appoint an Estate Administrator through a formal process called Probate. Usually the next of kin will file a Petition for Probate to begin the process.

• When the Decedent leaves a Will, it names an Estate Executor, and instructs the court how the assets are to be divided. Probate comes from the Verb “probo” which means “to prove.”  The Executor must “prove” the Will by submitting it to the court and initiating formal Probate. Therefore, with or without a Will, unless one sets up and properly funds a trust during his life, his assets will likely need to undergo Probate administration.

• The only way Decedent’s assets with gross value exceeding $150,000 can be administered outside of court and without Probate, is through a Living Trust. This is because while the person was alive, he sets up the legal entity (that doesn’t die) called a Trust and transferred title to all of the assets into the Trust, which is now the legal owner, and exists for the benefit of the person who created it (the “Settlor”). At the Settlor’s death, the Settlor leaves nothing in his individual name, and thus no Probate is needed. All of the Settlor’s assets remain owned by his or her Trust, which also provides who will be in charge of their management and control, and how they will be divided and distributed by the named Successor Trustee outside of court.

 

Probate and Trust administration accomplish exactly the same goal – pass assets from a Decedent to his/her heirs, but in two dramatically different ways: the hard, expensive way (Probate) and the easy, much less expensive way (Trust Administration).

• The Probate process in California typically takes 10 to 14 months to run its course, is very costly, and most information becomes public record. In contrast, a Trust Administration is much less expensive, can be accomplished in a few short months, and is conducted under complete privacy. It therefore expedites the process of transferring the Decedent’s assets to the intended beneficiaries at a fraction of the cost, leaving more of the assets to the beneficiaries.
• Real Property in particular is administered in the County/State where it is located. Owning real property located in various States makes its administration infinitely less expensive and simpler when it is owned in Trust, which avoids having to probate each property in each of the County and State of its location, thus undergoing multiple Probates.

 

ANATOMY OF A PROBATE

There are many technical aspects of the court-supervised process of Probate, which are simply not an issue with administering a Trust. An oversimplified probate administration looks like this: the process begins with the filing of a Probate Petition, posting formal Notice in a newspaper to notify the Estate Creditors, posing Bond (unless waived by a Will), followed by a hearing at which an Estate Representative is formally appointed. Next, the Estate Representative need to serve all known creditors with blank Creditors’ Claims and invite them to partake in the estate assets; he or she needs to formally notify a number of State and Federal agencies; needs to have the estate assets valued by a court-appointed appraiser, known as the Probate Referee; needs to prepare and file with the court an Inventory and Appraisal of the Estate. After all Creditors’ claims issues are resolved and paid, all of the Decedent’s assets are collected by the Estate, and tax returns for the Decedent and the Estate Filed, a final Account and Report with proposed distribution of the Estate is presented to the Probate Judge for formal approval, and for an Court Order of Final Distribution. Upon remitting distributions to each Heir and filing of Receipts on Distribution, the Estate Representative is formally discharged. Each step of the way, there are costs, fees and expenses involved. On average, without counting the Bond expense (which can be tremendous), an additional few thousand dollars can be expended, above and beyond Attorneys’ fees.

 

THE PROBATE FEES AND COSTS