ARTICLE 1:

WHAT IS PROBATE IN CALIFORNIA?

California Probate

Probate is the legal process of transferring a decedent's estate to the rightful heirs of the estate. The probate process involves (1) collecting and identifying the deceased person's property, (2) paying any debts and taxes, and (3) identifying the proper heirs and distributing the estate property to them. While the court oversees this process, in most cases the work is done by the executor or the administrator of the decedent's estate with the help of an attorney.

If a person is named as the executor of the estate in the decedent's will, a court hearing to establish the validity of the will must be held before he or she can legally act on behalf of the estate. If there is no will and a person wants to act as the administrator of the estate, he or she must apply to the court and be confirmed before taking any action in connection with the estate. Anyone taking actions involving the estate before formal appointment by the court may be personally liable for those acts.

Generally, the rules regarding probate are found in the California Probate Code, the local rules for each superior court in the State of California and various tax codes and regulations. Each task in the probate process must be performed in accordance with the requirements of California law and the various tax rules.

Property Not Subject to California Probate

In many cases, the decedent's estate consists of at least some property that is not subject to probate. Life insurance, for example, usually passes directly to the named beneficiary without court confirmation. Property held in joint tenancy may also pass directly to the surviving joint tenant. Similarly, if the deceased person had created a "living trust," assets held in the trust are usually not subject to probate. A bank account may also designate a death beneficiary. (These examples assume that there is no dispute over the named beneficiary or the manner in which title is held. If there is a dispute and a civil action is filed by an individual, the court will determine the rightful owner of the property.)

Summary Proceedings

In certain circumstances, some or all of the decedent's property may qualify for a "summary probate" or "set-aside proceeding." These procedures are less complicated alternatives to a formal probate.

For example, if all of the decedent's property goes to the surviving spouse, a summary probate proceeding can be used where a "spousal property petition" is filed with the court seeking court confirmation that the surviving spouse owns the property. This proceeding can take as little as 30 days. In other cases, if the total value of a deceased person's property otherwise subject to probate is less than $100,000, an affidavit procedure may be used to transfer personal property, and the transfer of real property can be confirmed through a relatively simple proceeding.

While these procedures avoid the court proceedings of a full probate, this does not mean that the estate will avoid federal estate tax, income tax, or inheritance taxes. And, even if these methods are used, the decedent's debts must still be paid. Finally, even if a summary proceeding is available, there may be important reasons for deciding to proceed with a formal probate instead of electing a summary proceeding or a set-aside proceeding. (See Benefits of Probate below.) In all cases, you should consult with an attorney before you take any steps to transfer a decedent's property without a court proceeding.

If There is No Will in California

In many instances, a person dies without leaving a will. When this occurs, the decedent is said to have died "intestate" and the heirs to the estate are determined by California's laws of intestacy. The laws of intestate succession determine how the estate will be divided based on a person's relationship to the decedent, e.g., surviving spouse, children, other descendants, etc. Probate will still be required unless specific property of the estate is not subject to probate, such as life insurance, etc., or a summary procedure is available. If the deceased person did not leave a will and a formal probate is required because of the nature and size of the assets, the court will appoint an administrator to handle the probate proceeding. In most cases, the court will appoint the decedent's closest relative to act as the administrator.

Benefits of California Probate

Despite the negative image of probate, probate proceedings do provide some important benefits. There are some situations where, although formal probate is not required, it may nevertheless be advisable to elect to proceed with probate. In many cases, there are tax advantages to receiving property through probate as opposed to being received by way of joint tenancy or a gift made prior to death. Property obtained through probate almost always receives a "step-up" in the tax basis to the date of death value. This often results in a substantial capital gains tax savings on the sale of the property. Further, if there are creditors' claims against the estate, it may be beneficial to have probate court supervision so that the validity and amount of the claims can be determined. Probate also bars creditor's claims if they are not asserted during the "creditor's claims period" (generally four months after the executor or administrator is appointed). In addition, probate provides court supervision which ensures that the decedent's property will be accounted for and distributed in accordance with the decedent's intent. Court supervision can also be helpful when the family members or the beneficiaries have difficulty getting along.

Further, the "delays" associated with probate are generally not a significant problem. Family members usually have prompt access to joint back accounts and insurance proceeds. And, where special needs exist, the probate court will allow for preliminary distributions or a family allowance. Formal probate usually only takes six months to a year to complete.

In sum, even where probate is not required, you should consult with an attorney to consider these and other factors in deciding how best to proceed in handling the estate.

Probate, Trusts, Wills, and Estate Planning Attorney