Probate

Probate in California is the legal process through the court system whereby all of the debts and assets of a decedent are reported to the court. Probate is necessary when there is an aggregate of property valued at $150,000 or more (or $20,000 or more in real estate) and there is no beneficiary designation to the asset. In California, we do not have the ability to place beneficiary designations on real estate deeds, therefore it is necessary to create a trust to pass real estate past the joint tenancy and community property vestings.

After probate has been filed, notice must be given to all known heirs at law and all beneficiaries of the will (if the decedent had a will). There are two ways that probate can be opened. The first is by filing the original will with the probate petition and the second is to open a probate through the intestacy statute. Intestacy means that the heirs at law will take the decedents property after all debts and expenses have been paid according to who the state statute identifies as the heirs at law. For example, if a decedent was married and had 2 children, the property that was the sole property of the decedent would be divided 1/3 to the surviving spouse and 2/3 to the children (the 2/3 share divided equally to the 2 children).

After certain requirements have been met (typically 4-6 months after the opening of the probate), the court will issue Letters Testamentary (aka Letters of Administration) giving the nominated Executor the ability to act on behalf of the decedent’s estate. A will typically nominates who the Executor will be. If there is no will, a family member usually petitions the court requesting to be appointed to this position. The Executor’s job is to open an estate account, preserve and protect the assets of the estate, and to pay the decedent’s last expenses as well as keep close track of all expenditures and transactions of the estate and report the same to the court periodically.

The creditor’s claim period is 1 year but can be shortened through publication to 4 months. After the creditor’s claim period has expired and all the assets and known creditors have been reported to the court, a petition to close the estate can be filed. It is important to note however that the court system in California has a back log of cases in most counties so it can take some time to get a probate successfully prosecuted to the end. Due to recent court closures and budget cuts, the process takes 12-24 months on average depending upon the complexity and issues of the estate. The above represents a broad overview of the probate process in San Diego County. There are many details that go into a probate and can vary depending on the facts and circumstances.

The cost of a probate is laid out in the California state statute. The attorney and executor fees in a probate are based on a percentage of the gross value of the estate. For example, on a home valued at $800,000, the statutory fee to the attorney and executor would be $8,000 on the first $100,000 of value; $6,000 on the next $100,000 of value; and $24,000 on the remaining $600,000 of value. The total fee of $38,000 is then split equally between the attorney of record and the Executor. There are other fees associated with a probate in California as well. Such fees typically include the petition filing fee to open the probate, publication fees, probate referee fees, and fees to the court for Certified Copies of Letters Testamentary. It is also noteworthy that the fees to the attorney and Executor are calculated on the gross fair market value of the property going through the probate without regard to any debt carried on the property. So in our example above, the fee would be calculated on $800,000 even if the property only had $200,000 in equity.

Avoiding a probate is a much more attractive option. This can be accomplished by setting up a revocable trust and transferring the property to the trust on record title with the appropriate County Recorder’s Office. Probate in California causes huge time delays (12-24 months) to transfer the property to the beneficiaries or heirs, it costs on average 5 times the cost of a trust administration, and probate opens up the estate to the prying eyes of the public.

For more information on probate or on how to avoid it or to schedule an appointment about your unique situation, please call us at (760) 448-2220 or contact us here.