Probate Administration

Probate is the court supervised process for transferring a decedent’s estate to the beneficiaries named in the will. The term “probate” is derived from the Latin term meaning “to prove the will”. 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. Probate may occur even if there is no will. If the decedent died without a will, the decedent is said to have died “intestate”, and the decedent’s estate will be distributed to the decedent’s “heirs-at-law” as defined by the California Probate Code.

Purpose of Probate

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, any assets remaining are distributed to the correct heirs under the laws of intestate succession. California’s intestate succession scheme can be found under California Probate Code Sections 6400-6402.5. To view the applicable codes, click here.

Intestate Succession

Distributions will vary depending on whether or not the decedent was married, and if the decedent was married, whether the property to be distributed was separate or community in nature.

• Community property is generally defined as property acquired during marriage, using funds earned during the marriage, while living in a state that recognizes community property.

• Separate property is generally defined as property acquired by gift or inheritance, or property acquired using separate property funds.

If the decedent was not married at the time of death, the decedent’s estate will generally be distributed as follows:

1. Divided among the decedent’s children, in equal shares. If a child is deceased, but left surviving children (grandchildren of the decedent), the deceased child’s share will be divided equally among the deceased child’s children.
2. If there are no living children, to the grandchildren in equal shares.
3. If there are no living children or grandchildren, to the great-grandchildren, in equal shares.
4. To the decedent’s parents, equally, or if only one is living, to the sole living parent.
5. Brothers and sisters equally.
6. Surviving grandparents, equally.
7. Descendants of grandparents, such as aunts, uncles and cousins.
8. Descendants of a predeceased spouse (step-children).
9. Parents or surviving parent of a predeceased spouse.
10. Descendants of the parents of a predeceased spouse (brother-in-law or sister-in-law).
11. Next of kin or nearest relative.
12. Next of kin or nearest relative of a predeceased spouse.
13. State of California.

If the decedent was married at the time of death, community property will pass to the surviving spouse. Separate property will be distributed as follows:

1. If there is one child of the decedent, one-half will be distributed to the surviving spouse (or domestic partner) and one-half to the surviving child. If there is more than one child of the decedent, one-third will be distributed to the surviving spouse or domestic partner, and two-thirds will be distributed in equal shares to the children. If there is a deceased child, the children of the deceased child will take his or her share.

2. If there are no children or grandchildren, one-half to the surviving spouse or domestic partner, and one-half to the decedent’s parents equally (or one-half to the surviving parent if only one parent is then living).

3. If there are no children, grandchildren or parents of the deceased, then one-half to the surviving spouse and one-half to be divided equally among the decedent’s brothers and sisters. If there are any deceased brothers or sisters, the children of the deceased brother or sister share equally in their parent’s share.

4. If there are no children, grandchildren, parents, nieces or nephews, then all of the separate property will be distributed to the surviving spouse or domestic partner.

Note: To qualify as a domestic partner for intestate succession purposes, the parties must have completed and filed with the California Secretary of State a “Declaration of Domestic Partnership” and not revoked this Declaration prior to the decedent’s death.

Assets Requiring Probate

Probate is required when the decedent had assets which:

• Do not pass by right of survivorship to a surviving joint tenant;
• Do not pass to a named beneficiary (such as a beneficiary of a life insurance policy, the beneficiary of a payable-on-death (POD) account, or the beneficiary of a retirement account); and
• Exceed $100,000 in value.

Probate may also be required for an interest in real property exceeding $20,000 in value.

Initiating the Probate Process

The first step in the probate process is to file the original will with the Probate Court Clerk in the county where the decedent resided, within 30 days of the death of the decedent. The next step is the file the “Petition to Probate Decedent’s Estate” which includes certain information about the decedent, such as a rough estimate of the value of the decedent’s estate and nature of the decedent’s assets, names and addresses of all persons named in the decedent’s will, and names and addresses of persons who would inherit from the estate under intestate succession.

In the petition, the petitioner is either asking the court to name the petitioner as personal representative of the estate, or is nominating someone else to act as personal representative. The personal representative is the person who is responsible for overseeing the administration of the decedent’s estate throughout the probate process. If the decedent died with a will, the court will appoint the Executor named in the will as the personal representative of the estate. If the decedent died intestate, the court will appoint an Administrator of the estate. The Administrator is usually a person (typically a relative of the decedent) or entity (such as a bank or trust company) nominated by the decedent’s next-of-kin.

Under the California Probate Code, the Petition for Probate is to be heard by the court not less than 30 days nor more than 45 days from the date the petition is filed. However, in many counties the courts are backlogged with probate cases, and it is not unusual in some counties for the hearing to be set 60 days or more from the date of filing.

The Disadvantages and Advantages of Probate

The primary disadvantages of probate are:

• The time associated with the probate process. Probate in the State of California typically takes several months to complete. If the estate is large or complex, if there are multiple interests in real property or other assets that must be sold during the probate process or if there are disputes among the beneficiaries, the process may be lengthened considerably. Some heavily contested estates have taken years to complete the probate process.

• Lack of privacy-probate is a public process and any interested person can obtain information on the size of your estate, what assets you owned at the time of your death, how much you owed creditors, and how much you left to the beneficiaries of your estate.

• The high cost involved, which may include court filing fees, probate referee fees, attorney fees, and fees for the personal representative. Fees for attorneys and personal representatives are statutory, and are set by California Probate Code Section 10810. The fees are on a sliding scale depending on the size of the estate.

The fees set forth in CPC Section 10810 do not take into consideration any mortgages, debts or liens; therefore, if the decedent owned a home appraised at $1 million, this value will be used for the purpose of calculating attorney’s and personal representative’s fees, even if the property has a mortgage of $900,000. Using this example, to probate a home with a value of $1 million, the applicable attorney’s fees would be $23,000 for the attorney’s fees and $23,000 in personal representative’s fees, for a total of $46,000.

The fees set forth in CPC Section represent the maximum statutory fees an attorney may charge for ordinary probate services. In addition, in complex estates or estates which may require “extraordinary” services, the court may allow for added attorney’s fees in addition to the statutory fees for ordinary services performed.

To view California Probate Code Section 10810, click here.

Avoiding Probate with a Living Trust

Assets held in a living trust do not require probate. When the person who created the trust (referred to as the “trustor” or “settlor” of the trust) dies, the assets in the trust are distributed to the persons named, and in the manner specified, by the trust. The person or entity named in the trust as the successor trustee oversees the administration of the trust after the trustor or settlor dies.

Living trusts offer other advantages as well; they provide a plan for incapacity of the trustor and they allow the beneficiary to receive a “stepped up cost basis” to date of death value for capital gains purposes. To discuss these and other advantages of the living trust in detail, contact the San Diego estate planning firm of Law Offices of Scott C. Soady, APC by e-mail, or call us toll-free at (877) 435-7411 within California, or (858) 618-5510 outside of California to schedule a free in-house consultation.

Probate Resources

For further information on probate, visit the State Bar of California website.

Click here to view the California Probate Code.