When a loved one passes away, someone must handle the administration of his/her estate shortly thereafter. If the decedent left behind a Last Will and Testament, the individual appointed to be the Executor in that Will is who will handle the estate administration. If the decedent died intestate (without a Will), the court will appoint a Personal Representative to serve in the position. This person is generally referred to as an Administrator. Either way, if you find yourself in charge of administering the estate of a recently deceased loved one, you may find yourself wondering if all estates need to be probated.
What Is Probate?
Probate is the name given to the legal process that routinely takes place after a person’s death. One of the primary functions of probate is to provide judicial oversight to ensure that the assets owned by the decedent at the time of death are identified, located, and eventually transferred to the beneficiaries and/or heirs of the estate. Probate also protects creditors of the estate by requiring that they are notified of the decedent’s death and allowing time to file claims against the estate. Any challenges to the decedent’s Last Will and Testament are also litigated during the probate of the estate and all gift and estate taxes owed to the state and/or federal government must be paid before the conclusion of the probate process.
Reasons to Try and Avoid Probate
If you find yourself in charge of administering the estate of a recently deceased loved one, and you are new to the process, you may be wondering why avoiding probate is desirable. There are several good reasons to avoid probate when possible. First, probate can be expensive. Everyone involved (including you) is entitled to a fee for their services. The fees and related costs of probating an estate can significantly diminish the value of the estate that remains to be passed down to loved ones at the end of the process. Probate is also a lengthy process. You cannot conclude the probate of an estate until creditors have been given an opportunity to file their claims. In California, creditors generally have up to four months to file a claim which then must be reviewed and approved or denied. Consequently, probating even a relatively modest estate will generally take a minimum of six months to a year. A complex estate will easily take a year or more to probate. The reason this matters is that probate assets cannot be distributed to the beneficiaries until the conclusion of the probate process.
Is Probate Always Required in California?
As a general rule, some type of probate is required following a decedent’s death; however, it may be possible to avoid the time and expense of formal probate. Most states, including California, offer some type of alternative to formal probate for small estates that qualify. In California, there is a simplified affidavit process that can be used to transfer personal property, including accounts at financial institutions, if:
- You have the legal right to inherit the property AND
- The probate estate value does not exceed $150,000
The simplified affidavit process is not available if you wish to transfer title to real property, such as a home. or other real estate. However, there are simplified procedures for transferring real estate interests that do not exceed $150,000. They are different procedures than those used for assets other than real estate.
You will also need to consider the type of assets that make of the decedent’s estate because not all assets are required to go through probate. In addition, non-probate assets are not counted when determining the value of the estate for purposes of determining if the estate qualifies for the simplified affidavit process. Non-probate assets bypass probate altogether and can be distributed immediately following the death of the decedent. Common examples of non-probate assets include assets held by a trust, certain types of jointly held property, financial accounts designated as POD or TOD, and proceeds of a life insurance policy. Careful planning on the part of a decedent can help diminish the value of his/her estate by converting as many estate assets to non-probate assets as possible.
Contact a Sacramento Probate Attorney
Please download our FREE estate planning checklist. If you have additional questions or concerns regarding the need for probate, contact us at the Northern California Center for Estate Planning & Elder Law to find out today by calling (916)-437-3500 or by filling out our online contact form.
- Living Trusts and Incapacity Planning - March 31, 2020
- Estate Planning and Charitable Giving — Key Points - March 29, 2020
- Over-Funding Your Retirement Plan: A Potential Estate Planning Problem - March 27, 2020