Probate explained: frequently asked questions about the probate process
Q: What is probate?
Probate is the process through which a deceased person’s (also called the “decedent”) estate is distributed according to the terms of their will, or according to state law if they had no will. The probate process exists to confirm the validity of the will, to inventory and appraise the decedent’s assets, to pay any outstanding debts, and to distribute remaining property to beneficiaries and heirs.
In California, the probate process can be divided into six steps:
- Will validation.
- Executor/administrator appointment.
- Taking inventory of the estate.
- Paying any claims against the estate.
- Paying any estate taxes.
- Distributing remaining assets.
Q: What is an estate?
The word “estate” may conjure an image of huge tracts of land and stately mansions. But all people, not just the rich and famous, have an estate. Estate is a legal term which refers to the collective possessions of an individual which they owned at the time of their death. It includes all of their assets – jewelry, guns, tools, and collectibles; checking, savings, investment, and retirement accounts; stocks or ownership interest in businesses; cars, trucks, motorcycles, RVs, and boats; and of course, real estate like condos, houses, apartment buildings, commercial buildings, and land.
Q: When is probate necessary?
In California, probate may not be necessary under certain circumstances, including:
- The decedent’s property was owned in joint tenancy with a surviving person.
- The decedent’s property is community property owned with a surviving spouse or domestic partner.
- The decedent’s property is held in a trust.
- Other probate avoidance techniques have been used to make probate unnecessary.
- The total value of the decedent’s estate is $150,000 or less AND any real estate owned is valued at less than $50,000.
For an estate of $150,000 or less, it may be possible for family members to claim the assets by filing a small estate affidavit, or by utilizing a simplified small estate probate process.
Q: How long does probate take?
The average probate case without disputes or other issues takes approximately 12 to 24 months in the Los Angeles area, which includes the four-month claim period during which creditors can file claims against the estate for outstanding debts.
Q: What happens if the decedent doesn’t have a will?
If the decedent didn’t prepare a will naming an executor to manage the estate, the court will appoint an administrator to take care of the estate during the probate process. The administrator can be the decedent’s spouse, child, or other family member, and must file a petition with the court to be granted administrative powers.
Q: How are assets distributed if there is no will?
A person without a last will and testament dies “intestate” – meaning, “without testament.” In such a case, the estate assets are distributed according to California’s intestacy law.
Q: What are the responsibilities of the executor or administrator?
Executors/administrators (two different words for the same job) must adhere to all probate rules and regulations which include keeping deadlines and completing and filing all necessary paperwork with the court. Egregious errors can result in the executor/administrator being held personally liable for any losses.
Q: How much does probate cost?
In California, executor and attorney probate fees are set by law. The executor and the attorney are each paid for their services according to a schedule based on the value of the estate.
According to California Probate Code section 10800, probate fees are paid to both the executor and the attorney as follows:
- 4 percent of the first $100,000
- 3 percent of the next $100,000
- 2 percent of the next $800,000
- 1 percent of the next $9,000,000
- ½ percent of the next $15,000,000
For a $750,000 estate, the fee would be calculated as follows:
- 4% of $100,000 = $4,000
- 3% of $100,000 = $3,000
- 2% of $550,000 = $11,000
- Total = $18,000
In the above example, $18,000 would be paid to the executor and $18,000 would be paid to the attorney, for a total of $36,000. These fees are deducted from the value of the estate. If the estate does not have sufficient liquid assets to pay these fees, other assets of the estate – such as personal property or real estate – may need to be sold by the executor to pay these fees.
There are also fees for appraisals, publication of notices, court filings, and other expenses. Generally, an estate will incur between $1,000 and $3,000 in additional expenses. In the rare event of a particularly complicated estate, the probate court may approve higher executor, attorney, and other fees.
Q: What are the probate fees for larger estates?
For estates valued at $25 million or more, the court is tasked with determining a “reasonable amount” for the probate fees. Such estates can be quite complex and require a substantial amount of work by the executor and attorney, as well as outside services such as appraisers, auctioneers, security contractors, moving and storage companies, and many others. All these fees and expenses must be borne by the estate, and paid before any distributions are made to beneficiaries and heirs.
Q: Probate seems expensive. How can these fees be avoided?
The best way to avoid the cost (and time) of the probate process is with comprehensive estate planning completed prior to one’s death. Trusts and other legal strategies can be used to bypass the probate process, streamline the distribution of estate assets, establish protections for beneficiaries such as guardianship for minors and special needs trusts for differently abled beneficiaries, and ensure that all the wishes of the decedent are respected in order to honor their legacy.
Q: It’s too late for an estate plan – are there any other ways to reduce probate fees?
Some probate attorneys are willing to accept reduced fees under certain circumstances. Similarly, the executor of the estate can elect to receive a reduced fee from the estate, or waive the fee entirely. But it is important to understand that this does not change the responsibilities of the executor, a role which requires considerable time and dedication to properly fulfill.
Q: Does every asset have to go through probate?
Assets such as life insurance policies, 401(k) accounts, annuities, and retirement investment accounts generally have named beneficiaries, and if so, are not subject to probate.
Q: How does probate affect taxes?
All taxes must be paid on the estate before any assets can be distributed, unless the decedent implemented certain types of advanced tax planning. Like probate fees, debts, and expenses, taxes are paid by the estate before remaining assets are distributed to beneficiaries and heirs.
Q: Who is notified about probate?
Generally, all executors, beneficiaries, and heirs who are named in a decedent’s will are informed about the location, date, and time of all probate hearings.
Q: When should someone hire a probate attorney?
Because probate is a complicated legal procedure with a high potential for error, and disputes may result in costly litigation, most experts recommend hiring an attorney to probate any estate valued at $150,000 or more.
Do you have questions about probate, wills, and related matters? Contact Probate Attorney Barbara Craig to schedule a free consultation. Serving clients in the South Bay area including Torrance, San Pedro, Lomita, Harbor City, Carson, Wilmington, Long Beach and other nearby communities.