What is Probate?
Probate refers to the process where a court oversees the administration of a deceased person’s estate. To ensure that the decedent’s final matters and wishes are handled correctly and without bias, California has probate courts (or special departments of the court) to oversee the settling of estates.
When is probate necessary?
In California, if you die with a gross estate of more than $150,000 your estate will have to go through probate. When calculating the value of your gross estate, do not count assets that have a named beneficiary or a surviving joint owner/tenant. If the total of all other assets are more than $150,000, without subtracting debts, the estate will be subject to probate. If your estate includes real property valued under $150,000, a probate may not be necessary; however, a court hearing still may be necessary to transfer title of the property to your heirs.
What is the purpose behind the probate process?
The purpose of the probate process is to ensure that any final bills and expenses are paid, including any taxes owed; any assets remaining are distributed to the beneficiaries named in a will; or if the decedent died intestate (without a will), any assets remaining are distributed to the correct heirs under the laws of intestate succession.
What are the disadvantages of probate?
Time, lack of privacy and cost are generally cited as the primary disadvantages of the probate process.
The California Probate Code sets the structure for calculating the statutory fees that attorneys can charge for a probate. Higher fees can be ordered by a court for more complicated cases. The fees are four percent of the first $100,000 of the estate, three percent of the next $100,000, two percent of the next $800,000, one percent of the next $9,000,000, and one-half percent of the next $15,000,000. For estates larger than $25,000,000, the court will determine the fee for the amount that is greater than $25,000,000.
The fees listed are available to both the attorney for the executor and the executor. The fee is calculated based on the gross value of the estate. For example, if a house is appraised at $600,000 and it has a mortgage of $575,000, it is still considered a $600,000 asset for the purpose of calculating fees.
There are other fees that must be paid for probate of an estate including court filing fees, certification fees, publication of the probate notice, and appraisal of assets by the probate referee.
Are there any advantages to probate?
Under some circumstances, sometimes it is best to have a judge in control of the proceeding. He or she can decide disputes between heirs or between the heirs and the executor. In addition, creditors are required to submit their claims against the estate within a four-month period, provided they have been notified of the probate. If they don’t submit their claim properly, the creditor will not be able to recover on the debt.
Are life insurance policies and retirement benefits subject to probate?
Life insurance policies and retirement benefit accounts have beneficiary designations which control their disposition upon your death. Assuming the stated beneficiary survives you, probate will not be necessary. However, if the named beneficiary is deceased and a contingent (back-up) beneficiary isn’t named, probate may be required to determine who is entitled to the asset. There are tax and other planning implications involved in designating a beneficiary-careful consideration should be given when naming a beneficiary. Consult your estate planning attorney for details.