What is Probate?
If you have a Will or die without one, your estate will be subject to probate. Hiring an experienced lawyer from The Urbatsch Law Firm, P.C. may be one of the best decisions you can make to handle the probate.
Probate is the court-supervised process by which your estate is divided among your beneficiaries or heirs. During probate, the value of your estate is determined; your debts are paid; any taxes you owe, whether income or estate, are paid; and your property is distributed to the people you name in your Will. If you do not have a Will, your property passes through what is known as intestate succession. California provides “rules” by which property passes in this manner to your relatives. If you have a Will, the person that handles the probate of your estate is called the executor. If you do not have a Will, the person that handles the probate of your estate is known as the administrator and will typically be a family member.
Probate is a long process, typically taking over one year. In addition, it can be quite expensive as base probate fees are based on a percentage of the estate.
Is Probate Always Needed?
The size of the estate determines whether it will be probated. If the value of real property (land or home), including personal effects, exceeds $184,500 in 2022 (indexed annually for inflation), the estate will go through probate. If the estate is under the allowed limit, a simple affidavit procedure may be substituted for the lengthy and costly probate process.
Do all Assets go through Probate?
Not everything in a person’s estate automatically goes through probate. There are alternatives to probate. One is having a living trust. Another is a Spousal Property Petition, a procedure used by a surviving spouse to transfer all the deceased spouse’s property to the surviving spouse. Also, assets with valid named pay-on-death beneficiaries, such as insurance policies, IRA’s, and annuities, avoid probate as long as the beneficiary is alive.
What Happens in Probate?
The process depends on whether the deceased left a Will. If there is a Will (testate), and it names someone to be appointed as executor, then that person, usually with the assistance of an attorney, petitions the court to be appointed executor and to admit the Will to probate. The notice must be given to persons named in the Will, all known creditors of the deceased, and the deceased natural heirs, including a legal publication in the local newspaper where the deceased was domiciled. If the deceased left no Will (intestate), an interested persons petitions the court to be appointed an administrator of the estate.
The executor or administrator must collect the assets of the estate that are subject to probate, pay debts and death taxes, and request court approval to transfer assets to the decedent’s heirs or the persons named in the will. The executor or administrator will prepare an inventory and appraisal, file tax returns, settle the creditor’s claims and then, finally, distribute the estate.
How Long Does it Take to Probate an Estate?
For most estates, the probate takes nine months to two years. The size and complexity of the estate determine the duration of the probate process. If there is a conflict between the heirs or the beneficiaries, the process can take even longer.
What Is the Cost Of Probate?
Two kinds of fees are paid by the estate; statutory and extraordinary fees. Statutory fees are established by the state legislature and are calculated as a percentage of the gross value of probate assets, plus income receipts and net gains on sale of assets during the probate administration.
The attorney and the personal representative are each entitled to statutory fees: 4% of the first $100,000, 3% of the second $100,000 and 2% of the next $800,000, 1% of amounts above $1,000,000. For example, the probate of a $600,000 estate entitles the attorney a fee of $15,000 and the executor earns a fee of $15,000. Therefore, the total statutory fee for a $600,000 comes to $30,000, excluding extraordinary fees.
Extraordinary fees are requested when the services rendered exceed those usually required in probate administration. An award of extraordinary compensation to the personal representative or to the attorney for the personal representative is within the discretion of the court.
What Are the Advantages of a Probate Proceeding?
The advantages of a probate proceeding are that the court protects the heirs and beneficiaries. A probate proceeding cuts off the claims of creditors and clears the title to the property. In addition, questions and disputes are settled under the court’s jurisdiction.
What are the Disadvantages of a Probate Proceeding?
The disadvantages of a probate proceeding are that it is costly, time-consuming, and lengthy. Probate proceedings, as court proceedings, are inherently inflexible because the court controls the process. All probate transactions are a matter of public record; therefore, there is also a lack of privacy.
Is There an Alternative to Probate?
The expense and duration of probate is the reason many people execute living trusts. A living trust is a way to protect one’s heirs and beneficiaries from the cost, stress, and time lost in probate court. Most people want to consider ways to avoid probate and yet ensure that their assets are protected for their family and beneficiaries by creating a trust. Administering a trust should be done with the help of an attorney to make sure all the estate assets are transferred into the trust properly and the intent of the trustor is carried out.
