Probate

Probate is the Court process of transferring assets of a deceased person to his/her heirs. It is necessary when the deceased person died (1) owning Real Estate in his/her name alone of any value; or (2) owning personal property (financial assets) in the gross value of $150,000. If that is the case, Probate is inevitable – whether or not the deceased person left a Will.

Probate is very expensive. The probate fees are set in the probate code of CA (they are “statutory”) and are a percentage of the GROSS value of the estate.

Probate is a very technical, court-supervised, long and complicated process. Hiring an attorney with a lot of relevant experience makes the night-and-day difference between a long and costly Probate, and an expeditious, cost-efficient one. 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 the rightful heirs (or Will beneficiaries  – if a Will exists).

• When the Decedent died without a Will, the court has to appoint an Estate Administrator. Usually the next of kin will file a Petition for Probate to begin the process. There is a specific “order of priority” designated in the CA Probate Code as to who has the right to Petition the Court for Probate.

• When the Decedent leaves a Will, it names an Estate Executor, and instructs the court how the assets are to be divided. The named Executor must “prove” the Will by submitting it to the court and initiating Probate.

• The only way Decedent’s assets escape Probate, is through a Living Trust. When the Trust becomes the “owner” of all the assets of its creator, on the creator’s death, nothing is left in his/her individual name to require Probate. It is the Trust (and not the probate estate) who determines who is in charge, and who gets what. Trusts are administered privately, generally without any court involvement.

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, long, expensive way (Probate) and the easy, quick, and much less expensive way (Trust Administration).

PROBATE OR TRUST – YOU DECIDE

Probate typically takes 12 to 16 months (or longer) to run its course through the courts, is very costly, and all 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 vastly 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. When real property is owned but not transferred in the Trust, and such real property is located in other States, ANCILLARY PROBATE becomes necessary (i.e., probate in another state, alongside probate in CA).

TRUST OR PROBATE

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, if no objections are filed. 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 several thousand dollars can be expended – above and beyond the Statutory Attorneys’ fees.

 

THE PROBATE FEES AND COSTS