Often I tell clients that Probate is good for the attorney but not the Estate. What I mean by that is that if you have to go through a Probate you are going to be faced with a long process and a large bill from your attorney.
What is a Probate?
A Probate is a proceeding in court where the court determines who or whom will be inheriting the possessions of a deceased individual. Basically the court is employed to determine who gets what.
How does a Probate Work?
When an individual passes away another party is required to contact the court and inform them of the individual’s death. The individual who informs the court is called the Petitioner. The Petitioner is placed in charge of making sure that all the bills of the deceased individual, or decedent, are paid and that at the end of the Probate Proceeding the proper individuals receive their portion of the deceased individual’s possessions. The court must first make sure that everyone is alright with the Petitioner being in charge of the estate and the distributions, so they hold a hearing where others are given a chance to dispute the appointment of the Petitioner. If no one objects to the appointment of the Petitioner the court will appoint the Petitioner as either the Executor, if there is a will, or the Administrator, if there is no will. Once an Executor/Administrator is appointed they are required to notify creditors of the Probate Proceeding so that the creditors may inform the court of any money they are owed before it is distributed. If the creditors do not notify the court of the money they are owed in a certain amount of time they will no longer be able to get their money. Finally, when enough time is given to allow the creditors to notify the court of their debts the court approves the distribution of the property of the decedent’s estate.
How Long Does a Probate Take?
A Probate Proceeding will take at least six (6) months to be completed from start to finish. Once all of the paperwork is prepared for a Probate the Petitioner is required to post a notice of the Probate Proceeding for three (3) months in a newspaper where the decedent resided. This notice is to inform any creditors of the proceeding so that they may inform the court of their desire to be repaid. Once notice has been published for three (3) months the Petitioner must acquire a court date to have the account of expenses paid and the final distribution plan approved by the court. You may be thinking to yourself, “Well that’s only three maybe four months tops, so why did he say at least six?”. Right now, at least in California, the courts are underfunded and therefore very busy, the court’s schedule is very full, so when the Petitioner does request a court date it is most likely going to be scheduled three (3) months from the date the Petitioner requests it. The biggest problem with this time frame is that it leaves the family of the deceased being constantly reminded of their passing. For six (6) months there are updates, requests for information, paperwork that needs to be signed, and notices received reminding the family of their loss, which can be very hard for people.
How Much Does a Probate Cost?
A typical Probate costs $395 to file, plus the fees for the Probate Referee (an individual appointed by the court to assess the value of the estate), plus the attorney’s fees.
Attorney’s fees can range from $10,000 to $20,000 or even more. There are statutory fees, meaning there is a law that states what the attorney may charge for his/her services. This law was put in place to ensure that attorneys were not overcharging their clients, but it has actually caused it to be the set price for an attorney to do that work. It does not matter how much or how little work the attorney does, they are entitled to the amount set forth in the law. The amount the attorney is paid is determined by how much the deceased person had, if their estate is worth more the attorney gets paid more. Also with this statute the Petitioner/Executor/Administrator is paid statutory fees. The fees of the attorney and the fees of the Petitioner are all taken out of the deceased individual’s possessions. So before anything is given to the family of the deceased individual the attorney and the Petitioner are paid, which means that there is less for the family to get.
Further, with a Probate proceeding there are fees for a Bond. A bond is basically an insurance plan that is taken out by the Petitioner to insure that the Petitioner does not mess up when managing the property of the deceased individual. This sounds great, why wouldn’t you want to have insurance to make sure that the property is not mismanaged? Well, the reason you may not want a bond is because they can be costly depending on the Petitioner’s credit and how much property the deceased individual had, and that cost is deducted from the deceased individual’s property before the attorney takes his/her fees, before the Petitioner takes his/her fees, before the family gets what is theirs. Most of the time the bond is not even needed.
Do you have to do a Probate?
If you properly set up your estate before you pass away you can make it so that your property does not have to go through this process before your family gets what you want them to get. With the proper planning your estate can be instantly distributed upon your death. The Law firm of Kinley & Styskal, http://www.kinleyandstyskal.com, works very hard for our clients before hand to make sure that Probate is avoided.
How can you avoid Probate?
There are techniques using the manner in which you are holding your property that can cause that property to not have to go through probate. You can also transfer your property into a trust that would cause your estate to be small enough so that it does not have to go through probate.
How small does your estate have to be to not have to go through Probate?
Section 13100 of the California Probate Code states that if your estate is worth less than $150,000 you do not have to go through probate. You do need to prepare paperwork for the court and the entities who are holding certain property, but that process is much easier than going through an actual probate. It is recommended that you have an attorney prepare this paperwork since there are very specific things that the law requires in that paperwork.
I Have a Will, Does That Mean I Don’t Have to Go Through Probate?
No. If you have a will it must go through Probate, unless all of your possessions add up to less than $150,000. All wills must be Probated unless there is not enough value in the estate of the deceased person.
I Have a Trust, Does that Mean I Don’t Have to Go Through Probate?
It depends on how the trust is set up. If you have actually transferred title of your property into the name of the trust that property will not have to go through Probate. The problem is that often times people set up a trust and never actually transfer their property into the trust. Often people think, “Oh, I have a trust and a pour-over-will (a will that states that all of the deceased person’s possessions are to be placed into the trust) so I don’t have to go through Probate.” This is wrong! Any will, even a pour-over-will must go through Probate. If you have not specifically named your possessions in the trust or transferred title of your possessions into the name of the trust they are not in the trust. The pour-over-will is the device that permits the court, through the Probate Process, to put those items into the trust, but not before incurring the costs and delays of a Probate Proceeding.
How Do I Know if My Estate is Set up Properly?
Hire an attorney. If you contact the Law Offices of Kinley & Styskal we will be happy to sit down with you and look over your Estate Planning documents for no charge. We do not charge you until you actually have us doing work. We will gladly discuss your situation with you and let you know if we see any issues that might arise with your estate. We are very familiar with all of the techniques that can be implemented to avoid probate and would be happy to help you utilize them.
Come to Kinely & Styskal, we pride ourselves in treating our clients like family! We are a Loyal Family firm and We’ll Treat You Like Family! http://www.KinleyandStyskal.com