What you need to know about California Probate

What is Probate?

Probate is a 6-step process in which the court supervises the transfer of legal title of assets from a deceased person’s estate to his or her beneficiaries. Real property in San Diego would be included among those assets.

The first step is appointment of a legal representative who may be called an executor, administrator, or personal representative. This person may have been named in a will. However if the person died intestate (without a will) a family member or other interested party may request appointment. In most cases it is wise to hire a probate lawyer or estate administration attorney to prepare and file the Petition for Probate.

Step two involves giving notice of the death and of the probate hearing. Either the attorney or the petitioner will mail notices to everyone named in the decedent’s will and all of his or her legal heirs.

Notice must also be published in the newspaper where the decedent lived in order to let creditors know about the hearing. This gives them the opportunity to present proof of funds owning. Here in San Diego, notice of probate would usually be published in the Union Tribune.

The notice also gives all involved parties the opportunity to object to admission of the will and/or to the appointment of the executor or personal representative.

Step 3 is the actual probate hearing, which usually takes place several weeks after filing. In some cases the Court will require the people who witnessed the decedent’s signature on the will to come forward and sign a declaration.

If there are no objections, the court will approve the petition and formalize the personal representative’s appointment.

Step 4 is when the real work begins for the personal representative. He or she must take possession of, inventory, manage, and safeguard the assets until all debts have been paid and tax returns filed. This responsibility includes care and maintenance of any San Diego real estate to safeguard its value until either sold or transferred to an heir.

At this time it may be necessary to sell assets in order to pay the decedent’s debts. If so, it’s important for the personal representative to safeguard his or her position by having assets such as jewelry, art work, and antiques professionally appraised. Even sales of less expensive items should be well documented to prevent any appearance of wrongdoing.

Note that with the exception of live animals who need to be fed and sheltered, heirs should not be allowed to take possession of any of the decedent’s property until authorized by the judge.

When the estate includes San Diego real estate that has not been willed to a specific heir, it may be wise to sell during the probate period. It’s much easier to divide cash than real estate, and selling a house puts a halt to the ongoing maintenance expense.

In step 5, the executor will present an accounting to the Court. This will show that all debts and taxes have been paid and will account for all income received and expenses paid out.

Assuming that all was in order, the judge will authorize division and distribution of the remaining property in accordance with the terms of the will.

Step 6 is the final accounting after all property has been distributed. At this point the estate is closed and the probate process is at an end.

Is Probate necessary?

Whether probate is necessary or not depends upon the financial state of the decedent. Since the probate process provides for the legal distribution of the decedent’s assets to his or her heirs, if he or she had no assets to transfer, then in most cases it will be unnecessary. However, if there are debts owed or a need to set a deadline for creditors to file claims, the family might decide to open probate even without property to transfer.

Does all property go through probate when a person dies?

No, only that property which is subject to the authority of the probate court will be distributed through the probate process. This would include assets that are solely owned by the decedent. Some assets, known as non-probate assets, are distributed outside the process.

Examples of non-probate assets are those that are:

  • Held as “Tenants by Entireties” – only husband and wife can hold title in this manner. Ownership passes to the surviving spouse.
  • Held as “Joint Tenants with Rights of Survivorship” – When two unmarried people hold title in this manner, title passes to the surviving tenant.
  • Held in a Trust, a Living Trust, or a “Pour-over” Trust

Do life insurance or retirement benefits need to go through probate?

No, life insurance, retirement benefits, and money from IRA’s, Keoughs, and 401(k) accounts can transfer directly to a named beneficiary. Bank accounts that are set up as pay-on-death (POD’s) or “in trust for” accounts with a named beneficiary also transfer without probate.

Do living trusts go through probate?

No. Property held in a living trust passes directly to the beneficiaries.

How much does probate cost?

Each estate is unique, but as a rule of thumb, probate in California will cost between 4% and 7% of the value of the estate.

How long does probate take?

In most cases, a California probate will take from 9 to 18 months. However, if the estate is large and complicated, if will is contested, or if it is difficult to find the beneficiaries, it can take up to several years.

Where will the probate hearing be held?

At the court house.

Who is in charge of the probate process?

While the California probate court establishes the rules, the executor or personal representative is responsible for managing the estate and following the probate procedures.

Who can or cannot be the executor or personal representative in a California probate?

There are few restrictions on who can hold this position, as long as they are named in the will. In most cases, only the following may not be an executor/personal representative:

  • A minor
  • A person subject to a conservatorship or who is otherwise incapable of performing the duties
  • A person with a criminal record

When no person is named or when the named person either cannot or will not accept the position, other interested parties may apply for the position. In this case, the named person must be a resident of the U.S. A surviving business partner of the decedent may serve only if no interested person objects.

Does the Court supervise the personal representative?

Not entirely. The Court may require the personal representative to obtain permission before selling real estate or business interests owned by the estate. He or she must also have the Court’s permission to:

  • Pay fees to himself/herself
  • Pay fees to his/her attorney
  • Make preliminary distributions of property to beneficiaries

In addition, the Court may require the personal representative to obtain a surety bond. This is an insurance policy that protects the beneficiaries in the event of wrongdoing on the part of the personal representative.

If I am named as an executor / personal representative in a will, do I have to serve?

No. If you choose not to serve, the Court will appoint someone to take your place. Note that some wills do name an alternate executor. If no one named in the will is willing or able to serve, the Court will appoint a capable family member or an independent professional fiduciary.

Should you begin taking on the duties of an executor and later change your mind, you may do so. However, you’ll be required to give an accounting for your actions during the time you served.

If I serve as an executor, will I be paid?

Yes, unless you choose not to because you are already a beneficiary under the will.

You’ll be reimbursed for out of pocket expenses to manage and settle the estate. In addition, personal representatives are generally paid an amount equal to 2% to 4% of the value of the probate estate. The percentage decreases as the value of the estate increases.

Fees are taxable as ordinary income while inheritance money is tax free. So before deciding whether or not to accept payment, discuss the situation with your tax advisor.

What happens if the personal representative fails to perform his or her duty?

The Court may lower or deny compensation and may replace the personal representative. The personal representative may also have to pay for any damages he or she caused.

A personal representative may be held accountable for:

  • Improperly managing the estate assets
  • Filing to collect claims and money due the estate.
  • Overpaying creditors
  • Selling an asset without the authority to do so, or selling at an inappropriate price.
  • Failure to file income taxes on time.
  • Distributing property to beneficiaries before all creditors have been paid.
  • Distributing property to the wrong beneficiaries.

What if someone objects to the terms of the will?

If someone objects to (contests) the will, the executor should seek the advice of an experienced probate litigation attorney. If you are the person who wishes to contest a will, take the same advice: Hire an experienced probate litigation attorney.

This situation is common when individuals who believed they should have been named as beneficiaries were not, when supposed heirs protest undue influence or mental incapacity at the time the will was signed, when someone alleges forgery, or when someone comes up with another will – perhaps one that was written holograpically. (A holographic will is one that was hand written, signed, and dated by the decedent, but lacking the signatures of witnesses.)

Who can contest a will?

Only a person with a financial stake in the outcome can contest a will. For instance:

  • A child or spouse who was cut out of the will
  • A child who received 1/3 of the proceeds while a sibling received 2/3.
  • Children who feel that charity should not receive all of their parent’s assets.
  • Anyone who was treated more favorably in a previous will.

Wills may also be contested for reasons other than an objection to asset distribution. They may object to the person named as personal representative or as a trustee for trusts created by the will.

Again, if you wish to contest a will for any reason, seek competent legal representation.

When can a California will be contested?

This should be done as soon as possible and preferably before the hearing that accepts the will as valid. If you wish to contest after the executor has presented the will to the Court for validation (and it has been accepted) you have a maximum of 120 days in California.

Do I have to use an attorney for the California probate process?

Using an attorney for a California probate is not a legal requirement. However, it is a wise idea. The filing requirements are complex, and if you are not familiar with all of the deadlines and regulations, you may have a difficult time remaining in compliance.

It’s much easier when you have a professional who can lay out the duties, the deadlines, etc. He or she also knows the correct way to file the various legal documents and in most cases will do this for you.