What is Probate?
Probate in California is the statutory system governing the management of a decedent’s estate according to the terms of the decedent’s will or if he or she died without a will, according to California’s default “laws of intestacy.”
Is Probate Always Necessary?
The short answer to this is no. If the decedent set up a living trust and funded the trust during his or her lifetime, in most cases probate will not be necessary. If the decedent died owning a joint bank account or real property in joint tenancy with another individual, the property passes to the surviving joint owner by operation of law without the need for probate. Also, if the estate is relatively small (under $150,000), or if the decedent was survived by a spouse claiming an interest in the property of the estate, there are certain legal “short cuts” that may be available to avoid having to go through probate.
The Basic Probate Process
Probate is a Marathon, not a Sprint. Typically, a probate administration can last anywhere from 6 months to one year. The process is initiated by someone filing a petition with the local probate court requesting the appointment of a “personal representative” to manage the estate. If the decedent died with a Will, this person is usually referred to as the “executor.” If the decedent died without a Will, or someone other than the executor named in the Will is appointed, the person is referred to as the “administrator.” Typically, the court has to approve any major actions by the personal representative, such as selling real estate or settling claims by creditors. However, if appropriate, the personal representative can request the authority to carry out such actions without the pre-approval of the court.
Once the petition is filed with the court, the court will schedule a hearing regarding the appointment of a personal representative. In the interim, the petitioner is required to give notice of the hearing and to provide a copy of the petition to all beneficiaries named in the Will (if applicable) and all legal heirs. The petitioner is also required to publish notice of the petition in a local newspaper of general circulation.
If appointed by the court, the personal representative will generally be required to post a probate bond and pay a bond premium. This is akin an insurance policy to protect the estate against any theft by the personal representative. The amount of the bond is determined based on the value of the estate and whether the personal representative has been granted independent management authority.
Once appointed, the personal representative begins the process of inventorying the assets of the estate and determining if there are any outstanding debts to be paid. Upon receiving notice of the probate, estate creditors have a period of 4 months in which to file a creditor’s claim against the estate. Once this 4 month period has elapsed, and any outstanding claims have been settled, theoretically the estate can closed and the assets distributed.
Once the estate is in a position to be closed, the personal representative petitions the court to approve his or her proposed final distribution of the estate. After payment of applicable administrative costs (discussed in further detail below), the estate is distributed according to the decedent’s Will or if there is no Will, according to California’s default laws of intestate succession. If distributed according to intestate succession, the estate is typically divided among the decedent’s close relatives, such as the decedent’s surviving spouse and children.
The Cost of Probate
Formal probate costs include attorney and estate representative fees, court filing fees, publication fees, probate referee fees and costs of maintaining and selling the estate’s real property, among others.
The compensation for the personal representative and his or her attorney is set by California law and is based on the gross value of the estate according the to following formula:
Gross Value of Estate Attorney Fees Personal Representative Fees
1st $100K 4% 4%
Next $100K 3% 3%
Next $800K 2% 2%
Next $9mil 1% 1%
Next $15mil 0.5% 0.5%
>$25mil Reasonable amount to be determined by the court.
Compensation to the personal representative and the personal representative’s attorney is paid at the end of the court proceeding.