Understanding probate administration
By Barbara Craig, Attorney at Law
If the death of a loved one isn’t stressful enough, the cost and complexity of probate administration compounds an already difficult situation.
Probate is the process by which a court validates a deceased person’s (the decedent) last will and testament or determines how to allocate their estate in the absence of a will. There are four primary functions of the probate process:
- To identify or appoint an executor or administrator of the estate.
- To pay claims for payment of outstanding debts.
- To ensure that the decedent’s taxes are paid up to date of death.
- To distribute the remaining assets based on the decedent’s will or according to the state laws governing inheritance if the decedent died without a will – referred to as “intestacy.”
Executor or administrator selection
If the decedent had a will, he or she likely named an executor. The executor is responsible for managing the decedent’s estate. Any legal person such as a friend, adult children, charity organization, bank, or trust company can be named as executor. The person or party named as executor is not obligated to serve as such and may decline.
If there is no will, the nearest relative has first right to serve as executor or to nominate another person. If a suitable relative is not available and able to serve as executor or make a nomination, the court will appoints someone. That person is an administrator—not an executor—even though the function they serve is identical.
If there are no objections to the probate petition, at the time of the hearing the court will appoint the administrator who then is required to sign “letters of administration” or “letters testamentary” confirming their agreement to conduct probate administration.
Probate assets
Not every estate asset requires probate. Among the most common assets which are subject to probate include:
- Community property assets registered with the decedent’s spouse.
- Assets held only in the decedent’s name.
- Assets that the decedent held in common with others.
- Unregistered assets such as furniture, jewelry, etc. which are valued at over $100,000.
Conversely, assets which are exempt from probate include the following:
- Held in a living trust.
- Owned in joint tenancy.
- Where a beneficiary is named (e.g. life insurance policies, IRA benefits, etc.)
- Held in a credit union or bank where the decedent was a trustee for another.
- Registered as community property with right of survivorship.
- Registered in the decedent’s name and which are payable or transferable on death to another.
- Assets that go to a surviving spouse.
Key steps in the probate administration process
Filing a petition
The first step in the probate process is to file a petition in the superior court in the county in which the decedent lived at the time of his/her death. After the petition is filed, a notice of the hearing must be published three times in a local newspaper and this hearing must be mailed to the executor(s), everybody named in the will, and the decedent’s heirs at law. Finally, the court sets a hearing date within 30 days from the date the petition was filed.
Proving the will
In many cases, the will itself will be “self-proving” based on its wording. In such cases, there is no need for additional statements from witnesses. However, if a well requires proving—yet there are no witnesses—various methods can be used to prove the will such as identifying the decedent’s handwriting to verify the will’s legal origin.
Obtaining a surety bond
Unless expressly waived in the will, a surety bond posted by the probate executor or administrator is required to insure the estate against loss, theft, or executor impropriety. The bond’s value is paid from the estate.
Collecting assets
The executor or administrator takes possession of all assets subject to probate following his or her appointment. If any assets have titles—such as stocks, bonds, mutual funds, bank and credit union accounts, physical assets, and brokerage accounts—the title must be changed to designate the executor or administrator. Once all assets are collected, a detailed inventory is taken so the California Probate Referee can determine the fair market value of all non-cash assets.
Debt and tax payments
Following collection of the decedent’s assets, the executor or administrator pays outstanding bills, debts, and taxes due. Creditor claims must be filed within four months following the decedent’s death.
Asset sale
When estate assets must be sold, there are two ways to do so: via approval by the court or using the Independent Administration of Estates Act. Assets are usually sold when there aren’t enough funds to pay bills, debts, taxes, or other expenses in the executor or administrator’s budget.