In California, the probate process has become nothing short of a drawn-out public battle that costs a great deal of time and money. However, there are ways to avoid probate altogether and help ensure that family members avoid unnecessary stress and expenses following the loss of a loved one.

WHAT IS PROBATE?

Probate is the legal process of overseeing the administration of a decedent's estate. The process occurs in a special court, with proceedings varying by state.

In California, probate is necessary when a person dies with gross assets that total over $150,000.00, absent specific circumstances that would sidestep probate (including having your assets titled properly into a trust). If a decedent has a will, the executor named in the will is the appropriate initiator of the probate process. When there is no will, or the named executor is unavailable or unwilling to step up and serve, a family member will usually petition the court to be appointed administrator of the estate. In either case, an executor or appointed administrator undertakes the same function as a fiduciary of the estate.

The probate process typically begins with the filing of a “Petition for Probate” in the county where the decedent lived, for a cost in Sacramento County of $435. It is not unusual for the Court to take up to two months after a petition is filed to set a hearing date to rule on the petition, wherein the Court will issue “Letters Testamentary” or “Letters Administration” that appoint the executor or administrator and give that person legal authority over the assets of the estate.

After the executor or administrator receives legal authority over the assets of the estate, the decedent's assets must be gathered and accounted for. No assets or liabilities can be overlooked.  In addition, a bank account for the estate must be opened, a taxpayer identification number for the estate must be obtained, and certain fiduciary forms must be filed with the IRS. The executor or administrator must also compile an “Inventory and Appraisal” of all probate property and file that report with the Court. Depending upon the assets in the estate, the Court may appoint its own personnel, called a Probate Referee, to value certain assets in the estate, including real property and stocks and bonds.  This valuation is done for an additional fee, based on the value of the assets.

Throughout the probate process, it is the legal duty of the executor or administrator to safeguard all estate assets, including insuring real and personal property, maintaining real property, and taking reasonable steps to prevent theft and waste.  When all bills and taxes have been paid, the executor or administrator petitions the Court to close the estate, again submitting a $435 filing fee for the final petition. After the final petition is granted, the executor or administrator may distribute the remaining estate assets to the heirs or other named beneficiaries.

Thankfully, the executor or administrator is able to enlist help from an attorney, whose fees are paid from the estate. Qualified attorneys are a valuable resource in the probate process because they help guide the executor or administrator through the lengthy probate process and ensure that nothing is overlooked.  This is especially important when the probate process involves sales of estate property (particularly real estate), payment of taxes, responding to creditor claims against the estate, and addressing the concerns of the estate's beneficiaries.

Even with the assistance of an attorney, however, a probate process can still be a lengthy and involved ordeal.  The entire process can take anywhere from three months to several years.  In addition, all Court filings are a matter of public record, so the affairs of the estate become exposed to the public purview and each filing can carry its own hefty filing fee.  Fortunately, there are a few planning techniques that can avoid the delays, costs, and exposure of probate.

HOW CAN PROBATE BE AVOIDED?

The simplest way to avoid probate is to create a revocable living trust. A revocable living trust can help avoid probate because the assets that are transferred to the trust during a person's lifetime can be managed and distributed to the trust's remainder beneficiaries after a person's death.  When assets are all titled in the name of the trust and no assets remain titled outside the trust at a person's death, there could be no assets to pass through the probate process.  Although establishing and maintaining a trust comes with certain costs that can be higher than creating a simple will-based estate plan, the total cost of a trust administration is substantially less than the alternative probate process and a trust administration can take place much quicker than the probate process as well.

Another alternative for avoiding probate can include adding a loved one on title to an asset, however, this option is not generally recommended.  If someone is added as a joint tenant on another person's real property or accounts, that joint tenant becomes a legal owner of the property.  The joint tenant would then have legal access to the property and the property can be subjected to the creditors of the joint tenant and counted in that joint tenant's assets for purposes of divorce.  In addition, if a person has more than one ultimate beneficiary, the joint tenancy does not provide a means to distribute that person's assets to anyone other than the joint tenant.

Regardless of your specific motivation for wanting to avoid probate, the best option is to consult with a qualified attorney for advice. The one inescapable truth about probate is that avoiding it requires planning in advance, so the sooner you discuss your situation with experienced counsel, the better.  HMS Law Group LLP stands ready to help equip you to bypass the unnecessary headaches and expenses related to the probate process, or help you navigate through the probate process should you find yourself the executor or administrator of a loved one's estate.