Probate often gets a bad name in regard to estate planning. Anytime the court gets involved in personal or family matters, it creates some tension about what will happen next.
During the administration of an estate, California courts will supervise and, at times, dictate the transfer of assets from the decedent to heirs and beneficiaries. The court must also set deadlines for creditors to make claims against the estate as well as determine how excess debts will be handled.
We believe it is in the best interest of Californians to have an understanding of how this process works and what it means for them, whether they are establishing their own estate plan or will be executing or inheriting someone else’s estate.
Non-Probate Assets or Estates
Before we get into how probate works, it’s important to note that not all estates must pass through the probate process. There are select circumstances that will push an estate or assets held by an estate into probate.
Assets will be considered to be subject to the authority of the California probate court if they have no beneficiary designations (or all beneficiaries have died). Jointly held assets also are generally not subject to probate. Some estates must pass through the probate process if there are outstanding debts that need to be addressed. The probate court will provide a window for creditors to make claims and then oversee the process of curing those debts.
Petition for Probate
Once it has been determined (whether by you or your attorney) that the estate or assets in question should go through the probate process, a petition for probate must be filed with the county where the decedent lived at the time of death. This comes with a $435 filing fee.
At this point, a notice will be posted to a local newspaper to announce the initial hearings which will generally occur within several months of the filing, depending on the county. A notice will also be communicated to all heirs, creditors, and anyone specifically named in estate documents.
Initial Probate Hearing
At the first hearing, the court will appoint the administrator of the estate. If there is a will that names an executor then this person will generally be chosen by the court unless someone objects in court. If there is no will, a close relative is the most likely choice, and actually has priority to serve.
If there is a will, the executor will have the responsibility of proving the will is legitimate. Once this is done, the court will often ask the executor to post a surety bond, unless the will waives bond. This bond acts as a type of insurance that will ensure the executor carries out their fiduciary responsibilities to the estate and its beneficiaries and does not act in their own self-interest.
Once all of this is complete, the court will order the executor to gather all the assets that will be transferred through the probate process, and secure them through insurance or simply safekeeping.
The assets of the estate are held in the name of the administrator, but they are subject to the court still. As indicated below, assets cannot be distributed to heirs or beneficiaries until the court orders this.
The administrator is also in charge of obtaining valuations of the assets through a probate referee, who is a court appointed appraisal. Those appraisals must be filed with the court within 90 days of the appointment.
The administrator may be able to sell certain assets during the probate process, with or without a hearing, depending on the type of powers the court ordered to the administrator.
Curing Estate Debts
Before any assets can be transferred, the court must cure debts claimed by creditors. This can include dismissing any illegitimate debts along with paying proven debts. These payments will come out of the estate which may limit or completely eliminate the value of assets available to be transferred. If creditors fail to notify the court of a claim by the given deadline then the debt may be eliminated.
Paying Estate Taxes
Once all debts are cured, the estate tax will be determined, both locally and federally, based on the remaining value of the estate. California does not have an estate tax, but there may be assets held in other states that are subject to that state’s estate tax. For more information on federal estate taxes, you can read our previous blog on the subject. These must be paid out from the estate before any assets are transferred or the executor runs the risk of being held personally liable for any tax amount that cannot be covered by the estate.
Addressing Estate Contests
Others may contest the estate if they have a legitimate legal interest in doing so. This includes any legal heir, even those not named in estate documents, as well as anyone who was named in previous documents but was left out of the final version. Those contestations must be addressed and either dismissed or cured before proceeding.
If the estate has several claims against it this process can turn into litigation that takes a significant amount of time and money to complete. Once any of these claims are sorted out, the estate and probate process is able to reach the final stages.
Closing the Estate
Once all of this is taken care of, the executor must obtain a court order to begin transferring assets to the designated beneficiaries. The court will also order the payment of attorney’s fees, as well as the fees to the administrator.
Once the assets have been transferred, the executor will file a document to formally close the estate. This can be done once all assets are transferred and any fees are paid.
Probate can take time and present families with important decisions and conflicts that must be addressed. Attempting to handle all of this without an attorney could put your estate and your inheritance at risk. For help with estate planning and the probate process, contact the Law Offices of Tyler Q. Dahl.
Dahl Law Group
