PROBATE – IT’S NOT FOR THE FAINT OF HEART
Probate is one of my areas of practice and I try to make it as pleasant and economical for the client(s) as I can. Often people starting the probate process are still grieving, and I am sensitive to those feelings of loss.
In California there are several ways that property can be distributed after the death of a loved one.
There are the full probate, a small estate probate for personal property (by affidavit), and a small estate probate for real estate. A surviving spouse can file a Spousal Property Petition if all the property is community property, and sometimes the Court will allow a little separate property to pass by this procedure , as well.
Following are some basic statements regarding probate of estates in California.
When a person dies with a Will, or without a Will, there will be a “full probate”, unless their assets are worth less than certain minimums in the Probate Code which can change from year to year.
The Court will appoint a person or institution to administer the estate. If there is a Will, the person is called the Executor. Usually, a person nominated in the Will will be appointed but that is solely up to the Judge. If the person has a criminal record, a bankruptcy, or other problems the Court may not appoint him or her. Then the Court will look to see if alternatives have been named in the Will.
If there is no Will, the person is called the Administrator. There is a specific order of priority laid out in the Probate Code.
First, surviving spouses or domestic partners;
Fourth, other children;
Sixth, brothers and sisters;
Seventh; children of brothers and sisters
Ninth, other children (and grandchildren and great-grandchildren), of grandparents;
Tenth, children of a predeceased spouse of a domestic partner;
Eleventh, other issue of a predeceased spouse or domestic partner;
Twelfth, other next of kin;
Thirteenth, parents of a predeceased spouse or domestic partner;
Fourteenth, children of parents of a predeceased spouse or domestic partner;
Fifteenth, conservator or guardian of the estate of the deceased person;
Sixteenth, public administrator;
Eighteenth, creditors of the deceased person; and
Nineteenth, any other person.
All from Probate Code Section 8461.
The purpose of probate is to gather the assets of the decedent and protect them, to pay any bills and taxes owed by the decedent, to give notice to creditors and beneficiaries of the proceedings, to resolve any disputes regarding the estate, to allow one to contest the Will if they think it is not valid, to pay taxes, and to distribute the property of the estate. Note that the last thing which is done is the distribution. There is no distribution of the final estate until everything else is taken care of and the court gives approval for the distributions.
Some probates are complex, involving litigation, tax matters, sales of real properties and stocks, and convoluted clauses in Wills. Other probates involve less assets and are more straightforward. Sometimes a probate looks like it will be simple, but problems arise.
In Los Angeles in 2014 it usually takes about a year to complete a probate, assuming there are no special difficulties.
Probate fees for attorneys and Executors-Administrators are set out in the Probate Code.
They can each receive, with court approval:
4% of the first $100,000 of the estate;
3% of the next $100,000 of the estate;
2% of the next $800,000 of the estate;
1% of the next $9,000,000 of the estate;
½% of the next $15,000,000 of the estate; and
A reasonable amount determined by the Court for all amounts greater than $25,000,000.
If there are special activities involving taxes, litigation or real estate sales there might also be “extraordinary fees” in addition to these fees.
While most people will not have such large estates, the costs can still be significant. There are a few basic ways to avoid probate:
1) Have a trust if you have real estate or assets that will otherwise pass through probate;
2) Name beneficiaries on your life insurance policies so they don’t pass through probate;
3) Joint tenancy property does not pass through probate, but if you have joint tenancy property you are likely better off with a trust;
4) Annuities should name beneficiaries to avoid probate;
5) IRAs should name beneficiaries to avoid probate;
6) Some mutual fund accounts can be held as “transfer on death” accounts; and
7) Bank accounts can be held as “pay on death” accounts.
The above are just a very few issues and questions involved in a probate of an estate.
SMALL ESTATES WITHOUT REAL PROPERTY
Small estates composed of personal property (stocks, bank accounts, insurance policy proceeds), can often be administered using a Probate Code Section 13100 Affidavit. The total amount of the assets in this procedure varies over time.
SPOUSAL PROPERTY PETITION
A surviving spouse or domestic partner can file a petition to have the community property pass to them without a probate. This is a much shorter court proceeding than the full probate.
SMALL ESTATES INVOLVING REAL PROPERTY
A petition to distribute a combination of real property and personal property can also be filed as a summary procedure.
REAL PROPERTY OF SMALL VALUE
Real property of small value, such as a vacant lot in the desert, can also be probated using a summary procedure (Probate Code Section 13200).
NOTE THAT ALL OF THESE MATTERS, AND ALMOST ALL PROBATES, CAN BE AVOIDED BY HAVING APPROPRIATE TRUST DOCUMENTS.
Note also that this short explanation does not qualify anyone to commence a probate, it is provided solely to give guidance to those browsing the website as to some of the issues and questions involved. No one should start a probate without the assistance of an experienced attorney.