What is probate?
Probate is a court supervised process that oversees the distribution of a deceased person's assets. Probate 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).
Estates over $150,000 must be probated
Currently, the California 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. So, if your loved one did not create an estate plan and left property in his/her name at the time of death, the law requires a probate.
Plus, the deceased person's liabilities are not taken into consideration when the value of the estate is determined.
For example, if the deceased person owned a home with a "fair market value" of $825,000 and there is a mortgage balance of $700,000 (leaving $125,000 in equity), the home will be part of the probate estate because the amount of the equity is disregarded. Only the value of the home ($825,000) is used when determining the value of the deceased's estate.
Why do I 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). In my example above, the probate fees would be based on the $825,000 fair market value of the home plus the value of any other assets in probate.
What type of costs are included in probate?
Here is a partial list of who or what gets paid during the proceedings:
- the probate court
- the local newspaper
- the probate attorney
- the personal representative or executrix
- an appraiser
- a tax consultant or CPA
- the surety bond company
Probate is Takes a Long Time
Due to the back log in our courts, it takes a minimum of seven months for a probate to be completed. However, it is very common for a probate to take one year and in some cases, up to two years, to complete. Delays can generate additional costs, such as bank account fees, maintenance of the property, real estate agent commissions, and property taxes.
So, 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. If you 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.