Understanding Probate In California

Understanding Probate in California

If you really want to scare someone, all you have to say “probate.” As soon as I mention probate during an initial estate planning strategy session, a terrified look washes over my clients’ faces. Even if they don’t understand what probate is, most adults know probate is not good. This article will help you better understand probate in California.

When does probate happen?

A suitable estate plan can avoid probate. In California, probate occurs when someone dies without a proper estate plan in place. In most cases, probate starts within a few months of someone’s death. In some cases, probate starts years later when problems arise for the beneficiaries, such as foreclosure, utility shut-off, etc. In situations where people wait to start the probate process, starting the probate may not cure the problems the family is facing. For this reason, it is crucial to speak with a probate attorney soon after your loved one passes. Starting the probate early, with the help of an attorney, is the best way to avoid significant problems later.

How can my family avoid probate when I die?

A sound estate plan, executed under the guidance of an experienced attorney before you have lost capacity, can help your family avoid probate at the time of your death. For most people, probate is unavoidable once their loved one has died without an estate plan.

What does probate accomplish?

Probate, in its simplest terms, is just the legal process for transferring assets from a deceased person to their living beneficiaries. During probate, the court establishes, with legal certainty, several factors: was there a will, what are the terms of that will, who is the executor of the estate, who are the beneficiaries, and what are the beneficiaries entitled to.

Once probate is initiated, the executor, who is appointed by the court, has the legal power to access bank accounts, control title of the house, and get control of any other assets the decedent owned.

Why does probate exist?

Probate helps prevent fraud. Banks and title companies cannot just assume that every person who walks in with a death certificate and will is presenting honest, correct, and legally valid information. Without probate, the bank has no way to verify whether the will is valid, current, or for the correct person listed on the account. Probate removes these doubts so the executor can manage and distribute the decedent’s assets appropriately.

Won’t my family get to decide what happens to my stuff when I die?

Your family will have little or no control over the outcome of your probate since a judge will be making all of the decisions based on the probate code. Unfortunately, probate code and common sense are not always aligned, which can put your family in a tough spot when navigating tricky family relationships.

Publicity can be a concern for your family since probate occurs in court and is a completely public process. All information about the estate, beneficiaries, and decedent is considered public record and can be discovered by anyone, including creditors and meddling relatives. Many of the details about your estate will even be published in newspapers.

Can’t my family just keep my house after I die?

Liquidity, or the availability of cash funds, can interrupt your family’s plan for your estate. Many times, the family just wants to inherit the house, especially if it’s a home they have been living in with the decedent. In many cases, there will not be enough cash in the estate to pay the probate fees and outstanding bills, so your family would be forced to sell the house to finish the probate.

For example, say you die with a house and a small bank account, worth about $250,000 together. The probate fee for a $250,000 estate is $17,500. If the house is worth $245,000 and there is a $5,000 in your bank account, where does the money come from to pay the $17,500 in probate fees? What about the money to pay off outstanding bills? Does your family have $17,500 in cash lying around to cover these costs so they can keep the house?

Why does probate cost so much?

There is a lot of confusion surrounding probate. Many people think the costs associated with probate are due to taxes, but probate is costly because of court fees, publication fees, attorney’s fees, and administrator fees. Repeat after me: “Probate is not a tax.”

Many of the fees associated with probate can be avoided with a sound estate plan, but that can only be implemented before you lose capacity or die.

When will my family get their inheritance?

During the probate no money is given out and no assets are distributed, so the beneficiaries are just waiting for their inheritance. When working with an attorney, an average probate will take about a year from start to finish. Without an attorney, it will likely take much longer.  Even with an experienced attorney, the court could implement requirements that lengthen the probate by several years. This would mean the family would have to wait several years for their inheritance.

Why does probate take so long?

Probate is a largely inconvenient legal matter that can only be handled by adhering to the mandatory probate “waiting periods” in California. This means probate takes a long time, even when you work with a licensed, experienced attorney. These strict laws can make it nearly impossible for someone to complete a probate within a year without the help of a licensed, experienced attorney.

What happens in a probate?

In order for a probate to happen, your family will first need to gather and present specific information to the court in order to open probate. Most of my clients take a month or two to gather this information.

Once probate is opened, your attorney will prepare initial legal pleadings and paperwork, which can take multiple weeks. Once these pleadings are completed, you will have to sign the pleadings under penalty of perjury.

Next, the attorney files the pleadings with the court and asks for a court date, which is usually a minimum of two and a half months out. Assuming the court has not asked for additional information at the first court date, the court will appoint an Executor or Administrator, which is when the probate is officially started.

By this point in the process, a minimum of five months has already passed. Now, we must wait another four months for the mandatory creditor’s period. After the creditor’s period has passed, the assets have to be dealt with and bills have to be paid, which can take one to three months.

Assuming that goes smoothly, you have to petition the court to close the probate. This requires another court date, which is a minimum of two and a half months out. At this point, in a well-executed probate, about a year has passed, which is why I tell my clients to plan on a minimum of a year for completing the probate process.

Will my family have to work with a probate attorney when I die?

The short answer is no, but it is more complicated than that.

The inconvenience of repetitive court dates, the confusion of adhering to mandated legal timelines, the swath of complicated pleadings, and the length of time that probate takes are the primary reasons people choose to hire an attorney when dealing with a probate matter.

Some people may avoid hiring an attorney in an attempt to save money, but it ends up costing them in the long run. In many cases, attorneys can leverage their expertise to save money by negotiating with creditors and avoiding further legal troubles. For many folks, the cost of the attorney is worth it when compared to the hassle of doing a probate on their own.

Is probate ever a good thing?

While it is true that probate is always expensive and takes a long time, there are a few unlikely scenarios where probate can be strategically utilized to reduce certain financial or legal burdens at the time of death.

In situations where there are either excessive creditors or pending litigation, a good attorney can use the expense and length of probate as a bargaining chip to reduce liability for outstanding debts and probable litigation. This is not a decision that should be taken lightly, and your best course of action, no matter what, is to consult an attorney to find out if you can use probate to your advantage.

For the vast majority of my clients these two situations are unlikely, and the best estate planning strategy for them is to avoid probate to save their family time and money. As with all forms of estate planning that I offer, this conversation can only be held before your incapacity or death, so it is important you meet with an attorney immediately.

Matthew Hart is a California Licensed Attorney who is an Estate Planning, Trust & Probate Law Specialist certified by the State Bar of California. His office is in Antioch and he can be reached at 925-754-2000 or www.MatthewHartLaw.com.

This article is a compilation of excerpts from articles by Matthew Hart that were originally published in the Antioch Herald newspaper.