What is Probate?

One of the main reasons why we generally advise our clients to do even a basic level of estate planning is to avoid the probate process. Probate is a public legal proceeding that is used to wind up a person’s legal and financial affairs after death. In California, probate proceedings are conducted by the County Superior Court of where the decedent lived and can take months and possibly years. So not only does probate make an estate public and may take a long time to settle, it is also expensive because, in addition to court fees, estate attorneys and executors are allowed to charge statutory fees based on the gross value of the estate. Please see below an example of statutory fees for a gross estate valued at $200,000.

Value of Estate

Fees to Attorney

Fees to Executor

Total Fees

$200,000

$7,000

$7,000

$14,000

 State law determines which assets of the decedent are subject to probate. Assets are generally subject to probate unless they fall under one of the four categories: 1) Assets are held in a non-probate form such as life insurance proceeds and retirement accounts 2) Assets are statutorily excluded from probate such as property held in trust. 3) Assets held in joint tenancy 4) Small estates, gross estates with a value under $150,000, are eligible to avoid probate.

There are some common misconceptions about probate. One of them is that having a will excludes the estate from the probate process. This is not the case as the Probate Court’s job is to settle an estate in accordance with the terms set out in the decedent’s will. Another common misconception is that most estates are too small to have to go through probate or that their gross estate value is calculated net of any debt against the estate. As stated above, estates with a gross estate value exceeding $150,000 are subject to probate. This means that even if the only asset of the estate is a personal residence with a value of $200,000 and a $175,000 loan against it, the estate is still subject to probate. This unfortunately could lead to the heirs being forced to liquidate or borrow against the family farm or home to satisfy the probate fees. Another consideration is that the local court handles the entire probate, but if the decedent owns real property in another state an ancillary probate proceeding must be undertaken in the state within which the real property is situated.

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