What Probate Means and How It Works | An Overview
As an estate planning law firm, one of our significant practice areas is probate, specifically assisting our clients in navigating the process or outright avoiding it with careful planning through an estate plan with a revocable living trust at the center. However, sometimes probate is unavoidable, whether it be due to unforeseen events or simply a failure to put anything down in writing, family can often be stuck having to navigate probate on a loved one’s estate yet be completely in the dark as to the process.
We have already discussed many topics surrounding probate or on pieces of probate cases in detail in other blogs and videos but below is an overview of the probate process in general. Please keep in mind this information is centered around California probate law, but may be useful to those outside California for informational purposes as many states’ laws mimic those of California. Additionally, although rarely, the California Probate Code is updated overtime so information may change.
What is Probate?
Probate itself refers to the legal process of passing clean title to assets onto the next generation – one's heirs and beneficiaries. Having a Last Will and Testament is not enough to avoid one’s estate from needing to pass through probate court, but a Will does allow one to outline their distributive wishes. Generally, only having a living trust can avoid probate with some exceptions for specific assets.
There are two (2) factors that determine whether a probate is required: cumulative assets worth over $166,250, or real property (land) in the decedent’s name. Estates worth under $166,250 can be administered without the need of court involvement and shortened probate procedures are available for real property valued under $166,250 or $55,000 - though still with probate court involvement.
The probate process generally involves three (3) stages:
1) Collecting and identifying the decedent’s property making up their estate;
2) Payment of the decedent’s outstanding debts and taxes; and,
3) Identifying the proper heirs and distributing the estate assets to them.
Please keep in mind, throughout the process, the probate court will be providing oversight over the administration with the manager of the estate (executor/administrator) being the one to perform the grunt work of closing accounts, selling assets, sending notices to interested parties and distributing assets.
Legal Terms to Know
Before discussing the step-by-step process for a typical probate case, there are some legal terms one should know first.
General Terms
Decedent - The dead person whose estate is at issue.
Estate - Property subject to the probate matter. I.e., the decedent’s property/assets.
Intestate - Estate distributed according to the California Probate Code where there is no Last Will and Testament or it has been found invalid.
Issue - Child(ren).
Managers
Executor - Manager of the decedent’s estate appointed by the court, as nominated under a Last Will and Testament.
Administrator - Manager of the decedent’s estate appointed by the court where there is no Last Will and Testament.
Letters - Court order granting authority to the manager of an estate. Executors receive Letters of Testamentary. Administrators receive Letters of Administration.
Interested Parties
Beneficiary - Person or entity identified to receive an inheritance under a Last Will and Testament.
Heir - Person entitled by law to inherit assets from an estate.
Contingent Beneficiary - Person or entity identified to receive an inheritance under a Last Will and Testament in the event one or more conditions are satisfied (such as the death of another named beneficiary).
Probate: Step-by-Step
There are two (2) items that will determine whether an estate must go through the Probate process: (i) an estate worth over $166,250, or (ii) where real property (e.g. a home or land) was held by the decedent at the time of death. While made easier when there is an existing will, the process is long and can be a taxing procedure. Below are the steps that will need to be taken:
1) Upon death; if there is a will, the possessor must take it to both the probate court's clerk & to the executor within thirty (30) days of the date of death. If there is no will, anyone wishing to be the administrator of the decedent's estate must file for a Petition for Letters of Administration (Form DE-111), AKA Petition for Probate. The court will decide who will become the administrator where there are multiple petitions.
2) A Petition for Probate has three (3) different options: (i) Petition for Probate of Will & for Letters of Testamentary; (ii) Petition for Probate of Will & for Letters of Administration with Will Annexed; and (iii) Petition for Letters of Administration. Our office can help you figure out which option best fits your particular case.
3) Once a hearing date is set, the petitioner must then give notice to anyone named in the will or who may have a claim on any part of the estate. In order to provide sufficient notice, they must have an outside party with no interest in the case to notify the beneficiaries and publish a notice in a generally circulated newspaper - a public notification of death.
4) After reviewing any and all paperwork, the court will appoint an administrator who will inventory all assets & file an Inventory and Appraisal form (Form DE-160); provide any creditors with a Notice of Administration to Creditors (Form DE-157); and prepare a final personal income tax filing. Creditors will have four (4) months to file a claim.
5) Once all debts have been paid/settled, the court will determine who receives the remaining assets, after which they will be distributed to the beneficiaries.
6) Finally, an additional hearing will be set to review the administration of the estate. When the court is satisfied, final receipts showing beneficiaries received their distributions are filed; the court finalizes the case; and the administrator is discharged.
Final Points
As discussed, a probate court will provide oversight of the process, but it will be up to the executor/administrator to perform the grunt work of cleaning up the estate and gathering assets, as well as meeting filing and notice requirements and deadlines. Having an attorney in one’s corner is an invaluable tool for navigating the process and ensuring the matter proceeds smoothly. You can perform the process without counsel, but if a court finds you are unable to meet your obligations such as missing deadlines, moving too slowly or even filing sloppy or incomplete work, the judge has the discretion to require an attorney to be hired or removing your authority and appointing the Public Administrator to clean up the matter – both are situations our office has seem on more than one occasion each.
Probate cases are court procedures and as such, they suffer from all the same trappings other court proceedings fall to: expensive fees, complicated forms and filings, and crowded court calendars. In California, a typically probate case takes at least 9-12 months from start to finish and can easily extend beyond that if any speed bumps arise.
Finally, we have already done a deep dive into how much probate costs (which you can read by clicking here) but to summarize, there are many fees and expenses that are required; attorney fees are set by the California Probate Code based on the gross estate value meaning no matter which attorney one hires, their fees are the same; and, court appointed managers are entitled to the same fee the attorney receives. Below are some examples of what one can expect:
Estate Value: $350,000
Attorney Fees: $10,000
Executor Fees: $10,000
Approximate Court & Third-Party Fees: $1,500
Potential Fees: $21,500
Estate Value: $500,000
Attorney Fees: $13,000
Executor Fees: $13,000
Approximate Court & Third-Party Fees: $1,500
Potential Fees: $27,500