Probate

Probate


What is probate?
What usually triggers a probate?
What are ways of title that avoid the need for “letters” from the probate court?
If I cannot avoid a probate, what do I do?
What happens after the probate letters are issued?
How much does a probate cost?
How long does a probate take?
What if the decedent owns real estate in another state?
How Can I Find Out More?

What is probate?

Probate is a court supervised transfer of title of your property to your heirs. Many people mistakenly think that only having a will avoids probate. The opposite is generally true. Having only a will almost guarantees that your assets will have to be probated. In its most basic terms, probate is a legal process that takes place after someone dies in order to legally transfer the title in an asset to the beneficiaries designated in a will. California probate law also governs the process for the distribution of property where there has been no will. The law provides for the determination of who qualifies as an heir to the deceased and what portion of the assets he or she is entitled to receive.

What usually triggers a probate?

A probate is triggered by a person dying who owns over $150,000 in assets in his or her name alone that are not otherwise disposed of. A probate is really a last resort. Simply put, a probate is triggered when some institution refuses to allow the beneficiaries to sell or cash in an asset of the decedent without “letters testamentary” from the probate court. In other words, the only person who could access the account or other asset is dead, and so you have to get the “letters” from the probate court to prove the court has given you the power to take over control of that asset of the decedent.

What are ways of title that avoid the need for “letters” from the probate court?

They include the following:
– Holding title in a living trust. If title to the asset, for example to a home, is held in your name as trustee of your living trust, there should be no probate.
– Holding title in joint tenancy with another person. This is most common. This is why there are few probates triggered at the death of the first spouse. If they do not have a living trust, the couple usually (less than wisely) hold title, especially to their home, as joint tenants. All the survivor typically needs is a death certificate to get control of the asset, even real property.
– Having a beneficiary. If the decedent named a beneficiary of the asset, no probate is needed, again probably just a death certificate is needed. Examples are life insurance and retirement plans.
– Assets totaling less than $150,000. If the assets not otherwise disposed of above, in other words those in the name of the decedent alone without any beneficiary, total less than $150,000, California law allows the person entitled to the asset to get the asset without getting probate letters. The person is entitled to the asset either under a will or by law. He or she can sign a form under the Probate Code in which he or she swears the assets are under $150,000 and he or she is entitled to it. Please note vehicles and boats with a DMV title, and mobile homes do not count against the $150,000.

If I cannot avoid a probate, what do I do?

You cannot get control of an asset and sell it or cash it in until the court issues the probate letters to you. If there is a will, someone named as executor has to step forward and petition the court to be named “executor”. If there is no will, California law decides who in the family gets the assets and gives priority to a spouse, or then children, or then some other family member to be named “administrator.” The person named as executor or administrator is called the “personal representative of the estate.” We will use the term executor but here it will also mean an administrator.

The executor cannot then distribute out the estate to the beneficiaries until at least four months have passed after the probate letters are issued and the judge then authorizes the executor to distribute the estate. Hence, our goal is to get the probate letters issued as quickly as possible so the four month period can begin running.

To get the letters issued, you must file a petition with the court for someone to be named the executor or administrator. Therefore, as quickly as you can, you should call us to set an appointment for us to get the information to prepare the probate petition for you.

What happens after the probate letters are issued?

Our firm will advise on all the details and the in’s and out’s of such process. The executor will first need to determine what are the assets and, using the probate letters, get title to them into his or her name as executor of the estate. The court appoints a “probate referee” to determine the value of non-cash assets, such as real estate.

At the same time, the executor will need to determine to whom the decedent owed money and send a notice of the death to the creditors. If there is no dispute, the executor should pay those bills. We will also determine whether any estate tax is owed.

How much does a probate cost?

The California Probate Code sets the statutory attorney’s and executor’s fees. Additional fees can be ordered by a court for more difficult cases. The statutory fee is determined by a formula that is $7,000 on the first $200,000 in assets plus 2 percent on the excess (up to a limit). Hence, a $600,000 estate would trigger $15,000 in attorney’s fees. The executor may, but does not have to take, the same fee for his or her services as executor. There are also court filing and legal notice fees and a fee paid to the probate referee. Tax preparer fees are also necessary, and will vary depending on the size, complexity, and number of beneficiaries of the Trust. Other costs typically involve insurance premiums for real or personal property and occasionally a bond fee if required by the court. Such fees are paid out of the estate.

How long does a probate take?

A probate takes at least six to seven months to get the assets to the beneficiaries. Typically we have to wait a month from the filing of the petition until the executor is appointed by the judge and the letters are issued. We then wait the four months for the creditors to make a claim. Finally there is a month’s notice of the final petition to the court asking for authorization to terminate the probate and distribute out the remaining estate to the beneficiaries.

What if the decedent owns real estate in another state?

If you do not have a living trust, your heirs will likely have to go through two probates, one in California and another in the other state where you own real estate.

How Can I Find Out More?

To learn more about probates, or if you would like a free consultation regarding a probate, please do not hesitate to contact us at (805) 482-2282, or e-mail us at KGS@Staker.com