California Probate is a process with the court involvement in which:
- The authenticity of the will (if any) is established,
- The executor or administration is appointed,
- All debts and taxes are paid,
- All heirs are identified, and
- The property in the probate estate is distributed according to the will (if there is a will). If there is no will (or living trust), the property will be distributed in accordance with the special law of the state where you live called intestate succession
- Probate is required in California for most estates of $166,250 or more where the deceased did not have a living trust, or certain assets were left out of the living trust.
Where are Probate Petitions filed? Petitions are filed in the Probate Court (Superior Court) in the county in which the decedent resided. Is it necessary to go through probate if the Decedent had a living trust? Hopefully not, but possibly. If the Decedent failed to transfer all of his of her assets to their Living Trust, probate may be required. Is probate expensive? It is clearly much more expensive to go through the probate process than dealing with the distribution of assets from a Living Trust. Who decides whether the Probate Petition will be approved? The decision is made by the judge who hears the case. How long does the probate process take? Assuming there are no problems with taxes, creditors, or people contesting the probate, the average probate in California will take about six to seven months. This includes a four-month creditor’s claim period. Is probate a confidential process? No. It is open to the public which is only one of the reasons most people want to avoid probate. Who is entitled to notice that a probate has been commenced? California law requires that notices be sent to all of the heirs of the decendent, beneficiaries who are named in any will, and proposed executors. I own a condominium worth about $475,000 and have other assets worth about $25,000. I have a mortgage of $450,000. What would my probate fees be on my $50,000 net worth? By state law, probate fees are calculated on the gross estate, not on the net estate. The probate fees on a gross estate of $500,000 are about $13,000 plus possible extraordinary fees as defined by law. A living trust would cost between $1,000 and $1,500 to establish and would avoid probate. Q. If I have a will, why would I want a living trust? A. A will is a one-way ticket to probate. Wills often must be formally verified or proven by a probate court and result in substantial probate fees being paid. A living trust is almost always the best way to plan an estate because it avoids the probate process and all probate fees. The probate process often takes over six months, whereas, with a living trust, the property can usually be distributed within one week. Q. Can a living trust save on estate taxes? A. Yes. While this is not always the case, many people are in a position to save on estate taxes by use of a well-drafted living trust. Q. What happens if I have no living trust or will? A. The state has written a will for you that you may not like. It goes into effect automatically when a person fails to make their own estate plan. Probate and probate fees are included. Q. Why should probate be avoided by the use of a living trust? A. In addition to the fees and lengthy administrative process, probate is a public process. It is not confidential as with a living trust. All members of the public have access to all information including who is receiving what property. Also most important, with a living trust, family living expenses can be provided almost immediately. With a will, the court must evaluate and approve the distribution of family living expenses. Q. Will owning property in joint-tenancy avoid probate? A. It will postpone it until the second person dies, at which point, probate will be required. In the event of simultaneous death (such as in an auto accident), probate will not be postponed. Joint tenancy has other possible disadvantages as well. It can result in a loss of control over the assets and may have severe adverse tax consequences. It is not the best estate planning method. Q. Is a living trust valid in every state? A. Yes. It is valid in most other countries as well. Q. Is a living trust expensive? A. No. The cost is modest when the cost of probate. The cost will depend upon the complexity of the plan, the type and amount of your assets and the amount of tax planning required. Always obtain a quote in advance and ask for a fixed fee. Q. Does it make sense to have a living trust if I am not married? A. Yes. If you want to avoid probate, you should have a living trust. Q. Can two unmarried people who are living together have a living trust? A. Yes. This is quite common and often makes sense. Q. If my child dies before me, does his or her spouse become the beneficiary of that child’s share of my estate? A. It’s up to you, but in most cases, the answer is no. Usually, the share goes to the children of that child (your grandchildren). If the deceased child has no children, usually the share would be divided among your other children. The formula is entirely up to you. Q. Can I leave part of my estate to a not yet conceived child or grandchild? A. Yes. This can be accomplished easily with a living trust. Q. Can I use my living trust to provide long-term care for a disabled child or grandchild? A. Yes. A living trust is a perfect tool to use for long-term care of any type. Q. Can I provide for my pet in my living trust? A. Most definitely. A properly drafted living trust can provide for the long-term care of your pet after you are gone. Q. How difficult is it to change my living trust? A. It’s very easy. Changes are made by a simple amendment as long as you are living. Q. Can my successor trustee make changes to my living trust? A. No. Upon your death, the right to make changes ceases. The living trust becomes irrevocable and the trustee is under a legal duty to fulfill every instruction in your trust document. Q. Is the cost of a living trust tax deductible? A. Usually yes. See your tax preparer for details. Q. If I transfer my home to a living trust, can I still deduct the interest? A. Absolutely. Q. Which assets should be transferred into my living trust? A. Generally, everything other than life insurance policies, IRAs, Keoghs and other pension plans. Q. Can my mortgage lender “call my loan due” if I transfer my home into a living trust? A. No. The lender’s position remains the same and they cannot call the loan due. Q. By transferring my home into a living trust, will I cause a reappraisal under California’s Proposition 13? A. Absolutely not. Q. Should my life insurance policies be owned by my living trust? A. No. In most cases, the living trust should be named as beneficiary of all policies. This will eliminate the risk that the named beneficiary (or beneficiaries) could die simultaneously with the owner of the policies, thus subjecting the insurance proceeds to probate. The policies should be owned by the insured. Q. Should my IRAs and Keoghs be placed into my living trust? A. A living trust should never own your IRAs and Keoghs because such a transfer would be equivalent to an outright distribution. Thus, it would have negative tax implications. Most people name their spouse as beneficiary and their living trust as a contingent beneficiary. Q. If married, what happens if I have separate property? A. Separate property is still transferred into the living trust. The assets will retain their character of separate property by use of a “Separate Property Agreement.” Q. If I have a living trust, will I still need a will? A. Yes. A pour-over will transfer any property left outside the trust at death to the living trust. While such property may still be subject to probate, it can at least be distributed as part of your overall estate plan. Q. Do I need an attorney? A. Yes. Only an attorney can give legal advice. It never makes sense to take unnecessary risks.
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The California probate process in more detail:
- Filing a Petition for California Probate: The first step in the California probate process is to file a Petition for Probate with the court in the county where the decedent lived.
- Notice to Heirs and Creditors: Once the Petition for Probate is filed, the court will issue a Notice of Petition to Administer Estate. This notice must be sent to all heirs and creditors of the estate.
- Appointment of Executor or Administrator: The court will appoint an executor or administrator to manage the estate. The executor is named in the decedent’s will, while the administrator is appointed if the decedent died without a will.
- Inventory and Appraisal: The executor or administrator must prepare an inventory and appraisal of all assets in the estate. This includes real estate, personal property, and financial accounts.
- Payment of Debts: The executor or administrator must pay all outstanding debts and taxes of the estate using the assets in the estate.
- Distribution of Assets: After all debts are paid, the remaining assets are distributed to the beneficiaries named in the will, or to the heirs if there is no will.
- Final Accounting and Closing of Estate: Once all assets have been distributed, the executor or administrator must file a final accounting with the court and obtain approval to close the estate.
The California probate process can be complex and time-consuming, and it is recommended that you seek the guidance of a probate attorney to assist you through the process.
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