Probate

A probate is a court proceeding that is started in the county in which the decedent resided when he or she died; that is necessary to distribute the decedent's estate to his or her heirs. A popular misconception is that a probate is avoided when the decedent has a will. In reality, if the decedent owned assets worth more than $150,000, and had a will or no will at all, his or her estate will be subject to a probate, which usually takes about a year to complete, sometimes longer, before any distribution is made to the decedent's heirs. A probate is usually not required when the first spouse of a married couple or registered domestic partnership dies, because all assets are usually held in joint names, such as joint tenancy on the title of real property, joint names on bank and brokerage accounts, and on the title to motor vehicles. However, when the second spouse or registered domestic partner (RDP) dies, a probate may be required to transfer the estate to the heirs unless other steps are taken to avoid a probate before the second death, such as signing a revocable living trust.

A probate is started by someone, usually the executor nominated by the will or the closest relative that is an heir if there is no will, who files a petition with the proper probate court. Such person is usually referred to as the personal representative. Upon the paying of the filing fee, the clerk of the court sets a hearing date that is about four to six weeks from the date of the filing of the petition. During that time between the submission of the petition and the first hearing date, the personal representative sends a written notice to all legal heirs, even if disinherited by the will, and hires a local newspaper to publish a "Notice to Administer Estate" three times before the hearing date.

Probate Code §8200 requires that the custodian of the will must deposit the will with the proper probate court within 30 days after the death of the person who made the will and send a copy of the will to the named executor, even if no probate proceeding is then being filed.

If there is no objection made to the court, the personal representative is appointed to act on behalf of the estate, but the court's issuance of "Letters Testamentary" if there was a will or by "Letters of Administration" if there was no will. Sometimes the court will require the personal representative to file a surety bond with the court for the estimated value of the estate. The personal representative may not act as such until "Letters" are issued.

The personal representative is then required to give known creditors notice of the probate proceedings and any such creditor has four months from the issuance of the Letters to file a creditor claim. Also, any challenge of the will must be filed within such four-month period. Once Letters are issued, the personal representative takes charge of all the decedent's assets, usually opening a new FDIC-insured, interest-bearing bank account to hold all funds, in the name of the personal representative as the executor/administrator of the estate of the decedent, under a new IRS taxpayer number for the estate that the personal representative obtains before any account is opened.

After letters are issued the personal representative may sell the decedent's real property and other investments after giving proper prior notice to the decedent's heirs or obtaining court approval.

The personal representative is required to give legal notice of the decedent's death to certain state and county agencies, such as the Franchise Tax Board, the Department of Health Care Services, if the decedent or the decedent's predeceased spouse received Medi-Cal benefits and the Assessor of each county in which the decedent owned any interest in real estate at the death.

During that four-month period after Letters are issued, the personal representative prepares an inventory of all the decedent's assets and sends the inventory to a "probate referee" a quasi-official who is appointed by the court, to appraise the value of those assets as of the date of the decedent's death. The completed "inventory and appraisal" is then filed with the court, and subject to inspection by anyone.

The personal representative then prepares a detailed accounting, usually using a format specified by §1061 of the Probate Code, and serves a copy on all heirs. If there are no open issues involving the estate, the personal representative prepares, files with the court and serves a copy on all heirs, a petition to approve the personal representative's accounting and to obtain an order from the court to distribute the estate. The clerk of the court will set a hearing about four to six weeks after such petition is filed with the court and another filing fee is paid. The personal representative is required to send each heir a notice of the hearing date and court location. After and only after the final order is issued, the personal representative distributes the estate to the heirs in the amounts or percentages approved by the court order.

Assuming no major complications or objections, the above takes about one year from the filing date to the date of distribution.

The statutory fees for "ordinary services" that are usually paid to the personal representative when the final order is issued as set forth in the Probate Code, which are summarized as follows:

4 percent on the first $100,000

3 percent on the next $100,000

2 percent on the next $800,000

1 percent on the next $9,000,000

12 percent on the next $15,000,000

"reasonable" compensation on the excess over $25,000,000

The calculation is based on the gross amount in the estate, with no deduction for debts, liens, mortgages and expenses.

The personal representative's attorney is entitled to a like amount of compensation.

In addition, the probate code empowers the court to authorize payment of "extraordinary" compensation to the personal representative and the estate's attorneys for "extraordinary services" rendered to the estate. These services include, by way of example only, sales of real property, preparation of the federal estate tax return, and estate litigation.

One way to avoid a probate is by a revocable living trust.

Click here to learn more on how to avoid probate.