Probate

WHAT IS PROBATE FOR? The purpose of probate court proceedings is to change ownership of money and property out of a deceased person’s name into the ownership of the heirs who are entitled to receive these items. If the deceased person left a Will then the probate court enforces the terms of the Will so that the heirs named in the Will receive what they are supposed to receive. If there is no Will, (an “intestate” estate) then the probate court enforces the formula written into state law for the distribution of assets to the heirs.

HOW CAN PROBATE BE AVOIDED? If a person has already made an estate plan before death such as a living trust then no probate is required to transfer ownership because it is done through the medium of a trust. Also, if money or property is put into “joint tenancy” with another or into “community property with right of survivorship” then probate is not necessary because the survivor then gets 100% ownership by automatic operation of the law on the death of the first of the two owners. Some estates are too small to require probate. For example if the value of the entire estate is less than $150,000 then ownership transfer can be done without probate by filling out legally mandated small estate affidavit forms.

WHY AVOID PROBATE? Because it is time consuming (up to a year or more), it is complicated (many forms to file with the probate court), the estate becomes public record (anybody can go to the courthouse and look up the probate court file containing detailed financial and personal information), and it is expensive. The expensive part is due to mandatory attorneys fees and executors fees built into state law. The fees are 4% of the first $100,000 in value of the estate; 3% of the next $100,000; 2% of the next $800,000 and 1% of the amount over $1,000,000. For an estate valued at $1,000,000 that computes to be $22,000 which has to be paid out of the probate estate assets. If that same $1,000,000 estate were in a living trust then probate fees are avoided completely and instead there may be attorney’s fees to administer the trust which typically are 2/3rds less than the mandatory probate attorneys fees.

WHY DOES PROBATE TAKE SO LONG? State law mandates a number of steps to take and forms to file. Also, there are built in waiting periods to make sure all of the decedent’s taxes and debts are paid before the probate court will allow the estate assets to be distributed to the heirs. The Will (if there is one) has to be filed with the court. Some person has to file a petition to get appointed as estate executor or administrator. Notifications to heirs and others have to be sent out and a notice must be published in the newspaper. From the time the petition is filed until the court hearing on the petition occurs is about 6 to 7 weeks. During that time the estate is in limbo because nobody can sign on the deceased bank accounts of transfer ownership of anything until the court order is issued appointing the executor or administrator. Then there is a 4 month waiting period to allow creditors to file claims. Also, a proper inventory has to be prepared and properties appraised by a court-appointed probate referee. Detailed accounting records have to be maintained and a detailed accounting must be filed with the court showing what has happened to the money and property during the estate administration. Tax returns have to be filed for the decedent and for the estate and a tax clearance has to be obtained from the state. Then a petition to close and distribute the estate has to be filed and it is 6 to 7 weeks after the filing that there is a hearing to approve the distribution. At any point in the probate process, heirs and other interested parties can file objections, lawsuits and petitions which would have to be disposed of before the estate can be approved to be distributed.

WHY HIRE AN ATTORNEY FOR PROBATE WORK? The probate process is so complicated that most people opt to hire an attorney to do the various forms and steps and to go to court for the various court hearings. Having a skilled probate attorney typically gets the entire probate process done sooner and avoids future problems and litigation. A large number of people in Orange County plan ahead and have proper living trusts and other estate plans in place so the typical probate often has loose ends that need an attorney to handle. If there are multiple heirs then the attorney can steer the case through the probate court to keep the heirs from having disagreements about how the estate should be administered. As an example, a typical probate has a family residence which is inhabited by various of the heirs who had no plans to move but now all of a sudden they find out the residence has to be sold to raise money to be able to pay the debts, taxes and the estate heirs. Our firm has decades of experience in handling various sorts of probate disputes and can assist in getting the probate on track to avoid problems which are apparent to the attorney.