What is Probate?
If you have a will, or die without one, your estate will be subject to probate. Probate is the court supervised process by which your estate is divided up among your beneficiaries. During probate, the value of your estate is determined; your debts are paid; any taxes that you owe, whether income or estate, are paid; and your property is distributed to the people you name in your will. If you do not have a will, your property passes through what is known as intestate succession. California provides "rules" by which property passes in this manner. If you have a will, the person that handles the probate of your estate is called the executor. If you do not have a will, the person that handles the probate of your estate is know as the administrator and will typically be a family member.
Probate is a long process, typically taking over one year. In addition, it can be quite expensive as base probate fees are based on a percentage of the estate.
Is Probate always needed?
The size of the estate determines whether it will be probated. If the value of real property (land or home) including personal effects exceeds $100,000, the estate will go through probate. If the estate is under the allowed limit, a simple affidavit procedure may be substituted for the lengthy and costly probate process. Since most people have assets valued over $100,000, most estates must be probated.
Do all assets go through probate?
Not everything in a person's estate automatically goes through probate. There are alternatives to probate. One is having a living trust. Another is a Spousal Property Petition, which is a procedure used by a surviving spouse to transfer all of the deceased spouse's property to the surviving spouse. Also, assets with validly named beneficiaries such as insurance policies, IRA's and annuities, avoid probate as long as the beneficiary is alive.
What happens in probate?
The process depends on whether or not the deceased left a will. If there is a will (testate), and it names someone to be appointed as executor, then that person, usually with the assistance of an attorney files with the court to be appointed executor and to admit the will to probate. Notice must be given to persons named in the will, all known creditors of the deceased, and the deceased natural heirs. If the deceased left no will (intestate), the court appoints an administrator on a probate proceeding.
The executor or administrator must collect the assets of the estate that are subject to probate, pay debts and death taxes, and request court approval to transfer assets to the decedent's heirs or the persons named in the will. The executor or administrator will prepare an inventory and appraisal, file tax returns, settle creditor's claims and then, finally, distribute the estate.
How long does it take to probate an estate?
For most estates, probate of an estate takes nine months to two years. The size and complexity of the estate determines the duration of the probate process. If there is a conflict between the heirs or the beneficiaries, the process can take longer.
What is the cost of probate?
There are two kinds of fees that are paid by the estate; statutory and extraordinary fees. Statutory fees are established by the state legislature and are calculated as a percentage of the gross value of probate assets, plus income receipts and net gains on sale of assets during the probate administration.
The attorney and the personal representative are each entitled to statutory fees: 4% of the first $100,000, 3% of the second $100,000 and 2% of the next $800,000, 1% of amounts above $1,000,000. For example, the probate of a $600,000 estate entitles the attorney a fee of $15,000 and the executor earns a fee of $15,000, therefore, the total statutory fee for a $600,000 estate comes to $30,000, excluding extraordinary fees.
What are the advantages of a probate proceeding?
The advantages of a probate proceeding are that the heirs and beneficiaries are protected by the court. A probate proceeding cuts off the claims of creditors and clears title to property. In addition, questions and disputes are settled under the jurisdiction of the court.
What are the disadvantages of a probate proceeding?
The disadvantages of a probate proceeding are that it is costly, time-consuming and lengthy. Probate proceedings, as court proceedings, are inherently inflexible because the court controls the process. All probate transactions are a matter of public record; therefore, there is also a lack of privacy.
Is there an alternative to probate?
The expense and duration of probate is the reason many people execute living trusts. A living trust is a way to protect ones heirs and beneficiaries from the cost, stress and time lost in probate court. Most people want to consider ways to avoid probate, and yet ensure that their assets are protected for their family and beneficiaries by creating a trust. Administering a trust should be done with the help of an attorney to make sure all the estate assets are transferred into the trust properly and that the intent of the trustor is carried out.