What is probate?

Probate is the process of proving a last will and testament, which means verifying that the will is legal and the deceased person’s intentions are carried out. Probate also occurs when there is no will and a probate court must decide how to distribute the assets of the deceased’s estate to his or her loved ones.

For small estates, probate may only take a matter of weeks or months. But the probate process for larger estates can take years. Anyone with a valid claim to any assets in the estate may contest the will or file a petition with probate court, which could drag the process out even longer.

Contrary to popular belief, wills don’t necessary help you avoid probate. But the terms of the will guide probate, and they can make the process easier for everyone involved.

Many assets don’t go through probate. Bank accounts, retirement funds, and life insurance policies with a payable-on-death beneficiary are transferred to the beneficiary upon the owner’s death. Assets in a trust are governed separately from probate according to the terms of the trust.

When does probate start?

When a person dies, that person’s assets become part of his or her estate, unless those assets are co-owned by someone else, such as a spouse. How those assets are distributed to the decedent’s loved ones is a major part of probate.

If the decedent left a will, then it goes before a probate judge who determines its legality. The will directs probate, but its terms can be contested. If the decedent did not leave a will, he or she is considered intestate, and the court will determine the rightful heirs of the decedent’s estate. This decision can also be contested.

Once the will is “proved,” then its terms are executed, hence why the person assigned to administer the estate is called the executor, who acts as the personal representative of your estate. When there is no will, the person assigned by the court to manage probate is called the administrator. (A court will also assign an administrator if the intended executor declines or is unavailable.) Any fees associated with executing a will or administering an estate can be paid out of the assets in the estate.

How does probate work?

There’s more to probate than just giving away the decedent’s assets. The executor or administrator must perform numerous tasks, and document each step of the process for a probate packet that contains all the relevant paperwork associated with executing an estate.

The executor gets the death certificate

The death certificate will need to be used to prove that the decedent is, in fact, dead. The judge may ask to see when the executor presents the will. The estate should have as many copies as needed because the death certificate will also be used to claim payable-on-death accounts and life insurance benefits.

The executor presents the will to the judge

Probate court proves the will and allows its terms to be executed. That means verifying the legality of the will, such as whether the testator was of sound mind (called “testamentary capacity”) when he or she wrote it, whether other versions of the will may have invalidated the one presented, and whether the will was properly signed by the testator and two witnesses.

Some wills are automatically cleared by the judge. These are self-proving wills, and they contain an affidavit from the testator and a notary. To make the process even easier, one of your witnesses can also present an affidavit to the judge after you die.

When the judge has approved the executor, he or she will issue a letters testamentary officially granting control of the estate to the executor.

Identifying and appraising assets

The executor or administrator is responsible for locating the assets that belong to the decedent’s estate. He or she must also have the property appraised, since the value of the property will become important later on when determining each beneficiary’s share. Any costs associated with the appraisal can come out of the estate.

Paying liabilities and debts

If any creditors are owed money from the estate, the estate must notify them within a reasonable time frame. The laws governing how and when to do this vary from state to state, and some states even allow especially small estates to skip this part altogether. Creditors can use the sale of assets to recover debts owed to them.

Lawsuits against the estate may also continue, and the estate may be required to pay out any judgments.

Note that if you’re the beneficiary of the estate, you are not personally responsible for paying any of the debt or liabilities of the deceased person unless you co-signed the debt or were named in the lawsuit. (You may be called by debt collectors trying to pressure you into paying, but feel free to ignore them.)

Paying taxes

During probate, the executor or administrator is responsible for paying any taxes the decedent owed. This includes not only property tax and income tax but also, if applicable, the estate tax (on estates valued at $11.58 million or more, as of 2020) and state inheritance taxes.

The executor must file taxes on behalf of the decedent using the same Form 1040 that the decedent used while alive. The executor must also file income tax for previous years if the decedent failed to do so.

Paying other expenses

The executor is responsible for paying expenses like homeowners insurance premiums and electricity bills.

Notifying beneficiaries

The administrator or executor must notify all beneficiaries that they are named in the will. Failure to do so can be grounds for a lawsuit from the beneficiaries to seek damages for assets they would’ve received had they been properly notified.

A last will and testament may also nominate people to become a guardian of the decedent’s minor children or even to take care of pets. The executor must notify these people as well.

Distributing assets

After any creditors, liabilities, taxes, and other expenses are paid, the executor or administrator must distribute the remaining assets to the beneficiaries. Specific bequests go to those named to receive them. The value of the remaining estate, which is called the residue, must be divided up among the remaining beneficiaries.

Via the executor, the beneficiaries can decide which types of property are transferred to whom, or if the property should be sold and the value distributed proportionally.

What is probate court?

Probate court is where the executor first presents the deceased’s last will and testament for the judge to verify. If there is no will, then the judge will consider the deceased intestate and select an administrator to manage the estate.

If anyone chooses to contest any part of the probate process, he or she will file the paperwork in a probate court. All contests to probate will be adjudicated in probate court. Unlike what you see in pop culture, probate court is generally pretty boring.

Most counties have their own court dedicated to probate, guardianships, and other estate matters.

How much does probate cost?

It’s possible that probate won’t cost your loved ones anything, especially if you had a small estate and an ironclad will. A good will can save your loved ones thousands of dollars in costs, including attorney’s fees and filing fees.

However, in many cases, you can expect to pay many different costs and fees associated with probate. These costs vary by state and are spelled out in your state’s probate code.

Executor compensation

These costs are paid to the executor for performing his or her duties. They may be outlined in the will, but your state may define a minimum amount the executor can collect.

For example, in California, the executor is entitled to receive a percentage of the estate as compensation, starting at 4% of the first $100,000, 3% of the next $100,000, 2% of the next $800,000, 1% of the next $9 million, and so on. Court-appointed administrators must also be paid a fee.

Court filing fees

Unless your estate is valued below a certain amount, your executor will need to file probate with the county clerk. Every state sets its own filing fee, and some counties may add additional administrative fees.

Attorney fees

Many states don’t allow attorneys to collect fees until after probate has ended. In California, the attorney is entitled to receive a percentage of the estate as compensation, starting at 4% of the first $100,000, 3% of the next $100,000, 2% of the next $800,000, 1% of the next $9 million, and so on, like the executor.

Probate bond

Also called “fiduciary bonds” or “estate bonds,” probate bonds are insurance for the value of your estate. As with insurance, you pay a small fee – usually a percentage of the total bond amount – and get a large amount of coverage in case something terrible happens.

In the case of an estate bond, you’re insuring your assets against malicious actions of your estate’s executor or administrator, including fraud or theft.

Many states require your executor to purchase a probate bond unless the will specifically waives this requirement. The executor must purchase from a private bond company using the estate assets.

Creditor notice fees

The state may require the executor to post a notice to creditors in a newspaper announcing your death so that the creditors can make a claim to money they’re owed. Filing the notice could cost money, which will depend on the newspaper and local law.

How long does probate take?

Probate can take as little as few months to several years. Larger estates have more assets to distribute and more claims to satisfy, so distributing assets could drag on for years. Legal challenges can increase this process. Generally, probates last up to one year. 

How can I avoid probate?

If the value of your estate is above a certain amount, your assets will have to be probated whether or not you died with a last will and testament. However, according to most state laws, your spouse has the right to claim the assets in your estate; any assets you own jointly with someone else may revert to sole ownership for the surviving owner.

Certain assets do not go through probate. They are either distributed separately or have their own rules regarding how they’re distributed. Non-probatable assets include:

• Assets in a trust, which are governed by the trust’s rules. Your will can even create a trust upon your death into which assets can go. Read more about the difference between a trust and a will.

• Payable-on-death accounts, which are established when you assign a beneficiary to your checking account, savings account, or retirement accounts. Also called transfer-on-death accounts

• The life insurance death benefit

Simplified probate and summary administration

Every state has laws in place to help small estates avoid probate. In most cases, small estate laws apply when there is no will, or if there is a will but its beneficiaries are no longer alive.

To apply for simplified probate in CA,  the respective heirs sign a Small Estate Affidavit. If the affidavit is accepted, the named assets are transferred to the heir, which is sometimes called summary administration. You cannot file a Small Estate Affidavit if the estate contains real property. 

Our job is to assist you through the challenges of probate, and our guidance encompasses the entire process, from the opening of the probate, until the final distribution to the beneficiaries or heirs. Our practice also extends to providing assistance with tools and techniques geared towards avoidance of full probate when applicable.