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Chris Jones: A Primer on Probate Can Help Clear Up Common Estate Misconceptions

There are many misconceptions about the court proceeding known as probate. This article is intended to provide basic facts about this procedure and to correct the most common misconceptions.

When Is Probate Necessary?

“Probate” is the court-supervised administration of a decedent’s estate. Probate is generally required where the decedent’s estate has a fair-market value of $100,000 or more, not including joint tenancy property, property being transferred to a spouse, property subject to trusts, or contractual benefits such as life insurance or retirement accounts for which there are beneficiaries.

It does not matter whether the decedent did or did not create a will.

Who Gets the Estate?

The estate property is either transferred to beneficiaries designated when there is a valid will, or to the decedent’s heirs at law. It is only in the rare instance that there is no will and no heirs are found that the state claims title to the assets.

How Much Does It Cost?

It is all about time and money. Under the best of circumstances, probate takes a minimum of six months. Both the start and completion require notices to interested parties and court hearings, and after the representative is appointed, at least four months must be allowed for creditors to present their claims against the estate.

The personal representative and his or her attorney’s rights to fees are set by statute. The schedule applies regardless of the ease or complexity of administration of the probate.

Where the personal representative is also a beneficiary, they may waive their fees because those fees are subject to personal income tax. Distribution from the estate is not.

For a $500,000 estate, the executor receives $13,000 and his or her attorney receives $13,000. For a $1 million estate, the executor’s fees are $23,000 and the attorneys’ fees are the same.

However, the personal representative may negotiate with the attorney for a reduced fee less than the amount set by the probate statute. This can result in substantial savings for the estate.

Do I Have to Use the Decedent’s Attorney?

The personal representative has the right to choose his or her own attorney, regardless of whether a will was drafted by an attorney, or the decedent had an an attorney at the time of death.

Does All Property Have to Go Through Probate Proceedings?

Whether probate is necessary depends on many factors: the way in which the decedent held title to property, whether there is a surviving spouse, and the nature and value of the decedent’s property (both real and personal).

Not all types of property in which the decedent has an interest are subject to probate. It is only required for property in which the decedent held title at death.

Property owned indirectly, for example in a living trust, or that which passes by operation of law, such as joint tenancy, or contractual benefits such as life insurance and employee benefits, are generally not subject to probate.

Where the decedent is survived by a spouse, and where property is passing out right to the spouse, it may be possible to avoid probate by use of a spousal set-aside proceeding, whether there is a will or not, and regardless of the nature and value of the property.

Likewise, where the property is titled in joint tenancy or community property with right of survivorship, there is no probate at the first spouse’s death.

May a Spouse or Dependents Receive Income before Probate Is Completed?

Although the beneficiaries must wait until the completion of the estate before receiving title to assets, it is possible for immediate dependents and spouses to receive a regular monthly allowance during the pendency of the probate proceedings or preliminary distributions.

This is especially critical where the survivors are dependent on the decedent for their expenses. As with most probate matters, it requires petitioning the court for consent and notifying all interested parties in the estate.

What Do the Beneficiaries Want to Know?

If you are the executor, you can count on the beneficiaries always asking the following two questions: How much do I get? When do I get it?

Be ready to answer those questions!

What you will not typically hear is a “thank you.” So for those of you who choose to accept the job, let me thank you in advance.

Conclusion

If you are faced with the possibility of having to go through the probate process, make sure that you get all of the information that you need to make informed decisions.

While the probate process can be cumbersome, there are steps to take that can reduce the time, money and aggravation. Use informed advisers!

Chris Jones is an attorney at Rogers, Sheffield & Campbell LLP, a Santa Barbara law firm. Click here to read previous columns. The opinions expressed are his own. This article is not intended to provide legal advice. For legal advice on any of the information in this post, click here for the form or phone number on the Rogers, Sheffield & Campbell Contact Us page.

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