Probate
What is a "probate"?
Probate is a court supervised proceeding for the settlement of an individual's estate by the terms of the person's will or by intestate succession if there is no will. The court has differing degrees of involvement depending upon the jurisdiction. In California, the court is involved from beginning to end but in other states where the uniform probate code is in effect, the court's involvement is significantly less.
What is the probate process?
In California, the probate process involves the filing of a petition to be appointed as an executor or administrator, depending upon whether or not there is a will. After the appointment by the court of the executor or administrator ('the personal representative' is the generic term), the personal representative will prepare an inventory of the estate assets which will be appraised by a third party who is appointed by the court. During the period of probate, creditors are given formal notice of the death and given a limited period of time within which to file claims. After that period has passed (that's four months in California), and after the probate assets have all been appraised by the court appointed appraiser, the personal representative at any time can petition for final distribution of the estate and render an accounting to the beneficiaries of the heirs, if that's called for.
How long does probate take?
Ideally, if no federal estate tax return is required to be filed because the estate of the decedent is under 2,0000,000, dollars, we would like to think that we can complete the entire process within seven or eight months. The only reason it takes that long is that there are statutory time frames and requirements that have to be satisfied before the estate can be distributed. If an estate tax return is required to be filed, and that filing occurs nine months after date of death, the process will probably be extended by a minimum of six months to a year. Depending upon the complexity of the estate tax return and the amount of tax involved, the personal representative may be unwilling to distribute the estate until an estate tax closing letter has been issued by the IRS.
Does the probate process differ from state to state?
The probate process differs radically from state to state. California is among some of the more conservative jurisdictions that depend upon court supervision to minimize the possibility of abusive process by a personal representative. There are a number of states that, in one form or another, have adopted the uniform probate code. And although I am not familiar with that process, I understand it can involve as little as an initial petition to open the probate and a final petition to close it.
How expensive is the probate process?
Under California law, the compensation of the personal representative and the personal representative's attorneys is a function of statute. There is a formula by which each is compensated based upon the gross value of the probate estate plus income, receipts and gains during the period of the administration. That compensation is payable only after a court has approved the amount of the compensation, therefore it's compensation that can't be paid on an ongoing basis. In addition, if either the personal representative or the attorney has engaged in what are called "nonstatutory services" - litigation, sale of real estate, preparation of an estate tax return - the personal representative or the attorney can ask the court for what are called "fees for extraordinary services."
Is there a way to avoid probate?
There are several ways to avoid probate. Before I address that question, however, I want to disabuse people of the notion that probate is necessarily all bad. In fact, probate can be a good way to ensure that an estate passes, subject to court approval, the way the decedent wanted. That said, I can also offer these alternatives to the probate of a will. Assets can all be put into joint tenancy ownership. Another way to avoid probate is the creation of living trusts, the funding of those trusts during lifetime and then the disposition of the trust estate by the terms of the trust at the death of the person who created the trust, which, if done right, can avoid probate all together.
