What is probate?
Probate is a court supervised process that can be broken down into three basic steps: (1) the gathering of the assets of the deceased; (2) paying the deceased's debts, taxes and expenses from those assets; and (3) then changing title of the assets according the decedent's wishes, if there is a Will (and if there wasn't a Will, according to California law).
Currently, the Probate Code requires an estate that is worth over $150,000 to be probated if a court order is needed to change title of the assets. Furthermore, the deceased's liabilities are not taken into consideration when the value of the estate is determined. For example, if the deceased owned a home with a fair market value of $825,000 and there was a mortgage balance of $700,000 (with $125,000 in equity), the home will be part of the probate estate because the amount of the equity is disregarded and only the fair market value of the home ($825,000) is used when determining the value of the deceased's estate.
Why do we want to avoid probate?
The number one reason why you may want to avoid probate is to avoid the costs associated with it. In California, the costs of probate and the associated fees are based on the value of the estate (liabilities are not taken into consideration when the value of the estate is determined per the Probate Code). Thus, in my example above, the probate fees would be based on the $825,000 fair market value of the home.
Here is a partial list of who or what gets paid during the proceedings – the probate court, the local newspaper (for required legal notices), the probate attorney, the personal representative or executrix, an appraiser, a tax consultant or CPA, the surety bond company, and so on.
Due to the back log in our courts, a probate takes one to two years to complete, so there may be many additional costs to cover, such as bank account fees, maintenance of the property, real estate agent commissions, and property taxes.
In addition to the costs of probate and the fact that it will take well over a year to complete, another reason many individuals may wish to stay out of probate court is due to the lack of privacy. Since this is a court proceeding, everything, including the Will, is part of the public record. If there are disputes between your heirs, they are also made public. So are all of your financial matters because accountings must be filed.
Consequently, if you are named as the executor, executrix, or personal representative in a Will, you are going to discover that this is a not an easy job nor one that cannot be taken lightly. As such, you are going to want a diligent and compassionate attorney who can guide you through this arduous and complicated process. Attorney Shawna Murray will be there for you, to help ease the burden.