What is probate? In general, probate is the court-supervised collection of assets, payment of debts and expenses with the net amount being distributed to the beneficiaries. The actual paperwork for submission to the court for its supervision is done by the personal representative (executor) of the estate and their attorney, and the fees charged by the attorneys and personal representatives are set by statute.
Not everyone will need to take their loved one’s estate through probate. If the value of the assets in the estate is less than $150,000, there are simplified procedures that will allow you to avoid probate. These procedures will allow you to gain control over the deceased’s assets, and there will be no need to go through a full blown probate. If the deceased person has more than $150,000 in assets* that are outside of a trust, and there is no surviving spouse, the answer is yes, a probate proceeding is very likely necessary.
(*Excluded from calculating value: Real estate outside California; joint tenancy property; property that goes outright to a surviving spouse; life insurance, death benefits, and other assets not subject to probate that pass to named beneficiaries; multiple-party accounts and payable-on-death accounts; any registered manufactured or mobile home; any numbered vessel; registered motor vehicles; salary up to $15,000; amounts due decedent for services in the armed forces; property held in trust)
Probate procedure can be surprisingly complex and will vary from county to county. Most of what happens during probate is essentially clerical. If it is necessary to file a probate petition, the next question is, who will act? If the decedent left a Will, they probably named someone in the Will to act as the executor of their estate. If the Will did not appoint an executor, or if the named executor chooses not to accept the nomination, or if the deceased died without a Will, an interested party can petition the Court to be named administrator of the estate.
The probate attorney (or the attorney’s assistant) obtains information from the executor, completes a small mountain of forms, and submits each to the court following a specified timeline. The attorneys office keeps track of filing deadlines and other procedural technicalities. In some cases, the attorney makes a few routine court appearances; in others, the whole procedure is handled by mail.
After appointment of the executor, the court will issue “Letters Testamentary,” granting the executor the power to act on behalf of the estate. The executor will be charged with taking control of the deceased’s assets. All of the assets (including small items like jewelry or collectables) must be gathered, documented and appraised. The court will further supervise any creditor claims for debts owed at the time of death. There is a fixed period of time for creditors to come forward to demand payment. Along with the payment of debts, the executor must see that taxes are paid. Income taxes must be paid for the personal income up to the date of death. Income collected during probate requires the filing of a separate estate income tax return on behalf of the estate. After the executor collects all of the assets of the decedent, and taxes and debts are paid, more forms are completed, and a Petition is filed requesting Court approval to distribute the remaining assets in accordance with the terms of the decedent’s Will, or the rules of intestate succession (if the decedent died without a Will).
As you can see, the probate process has the potential to take a great deal of time. During that time, the estate is tied up, and beneficiaries receive nothing. The courts move very slowly. Notice has to be given far and wide so creditors have at least four months to file a claim against the estate. A California probate normally takes one to two years from start to finish. In the event there is any type of dispute or Will contest, the matter can drag on for years.
For their services, both the lawyer and your executor will be entitled to fees from your estate. In California, the fees are set by the court, and based on a percentage of the estate subject to probate. Statutory Probate fees for a “routine” estate with a gross value of $500,000 amount to $26,000. These days, anyone who owns a home probably has an estate that large. Even if the home has a large mortgage, probate fees are still based on the fair market value of the home, not on your equity in the home. In addition, there are court costs, appraiser’s fees, and sometimes other expenses.