What is Probate?

Probate is the court-supervised legal process that deals with the administration of a deceased person's estate. This involves validating their will if one exists, identifying and inventorying the deceased's property, appraising the property, paying debts and taxes, and eventually distributing the remaining property as the will (or state law, if there's no will) directs.

Think of John, who passed away leaving behind a vast estate and a will. His estate would have to go through the probate process, wherein the court would first verify the authenticity of John's will, his assets would all be valued and appraised,  and any outstanding debts or taxes would be settled, and eventually the assets would be distributed as stated in his will.

Determining Ownership of Assets

Ownership of assets forms the backbone of the probate process. Different assets come with different rules concerning ownership and transfer, hence it's crucial to understand these nuances:

Trust

A Trust refers to a fiduciary relationship where a trustor (person creating the trust) entrusts assets to a trustee (person managing the trust) for the benefit of a third party known as the beneficiary. Notably, assets held in a trust are not subject to the probate process, saving time and administrative costs. For example, if your mother left behind a trust naming you as the beneficiary, you could claim the assets directly without waiting for probate, as long as the assets were transferred properly. 

Joint Tenancy

Joint Tenancy implies the co-ownership of property, where the surviving owner(s) automatically inherit the decedent's share. The key principle here is the Right of Survivorship.

Rights of Survivorship

This is a legal right that determines the succession of property ownership after one owner's death. In a Joint Tenancy with Rights of Survivorship (JTWROS), the deceased owner's share is automatically transferred to the surviving owners, bypassing probate.

Tenancy in Common

A Tenancy in Common (TIC) allows co-owners an individual stake in a property. Unlike joint tenancy, these interests do not automatically pass on to surviving owners but become part of the deceased's probate estate.

Transfer on Death and Payable on Death

Transfer on Death (TOD) and Payable on Death (POD) designations allow assets like brokerage accounts and bank accounts, respectively, to be transferred directly to beneficiaries upon the owner’s death, circumventing the probate process.

Small Estates

California law provides for a simplified probate process for small estates. If the total value of the deceased's estate is less than $184,500 (as of 2023), the estate may avoid probate or experience a less formal court process.

For instance, let's consider your deceased father left behind an estate valued at $150,000. You could probably utilize a simplified probate process, saving yourself the complex court proceedings typical of larger estates.

Estates worth over $184,500

For larger estates exceeding $184,500 in value, the probate process becomes more intricate, involving court supervision, extensive documentation, potential estate taxes, and the payment of valid debts. This makes hiring a probate attorney almost indispensable to navigate the intricate legalities efficiently.

Estates with Real Property

Real property, or real estate, undergoes distinct rules in probate. For a sole owner, the property becomes part of the probate estate. However, if it was held in joint tenancy with the right of survivorship, it passed automatically to the surviving owners.

For example, if your late grandmother left behind a vacation home solely under her name, that property must pass through probate. However, if she co-owned it with your father as joint tenants, the property would directly pass to your father, avoiding probate.

Dying without a Will and Intestacy

When a person dies without a will, they are said to have died intestate. In this case, the distribution of the estate is determined by California's intestate succession laws. Generally, this means that the deceased's closest relatives will inherit the estate. However, who those relatives are and the portion they each receive can differ greatly based on the specific familial situation.

What to do with Minor Heirs?

Minor heirs, or children under the age of 18, cannot directly inherit property. Instead, the court appoints a guardian or places the property in a trust until they come of age. This provision ensures that the minor's inheritance is protected and properly managed until they reach the age of maturity.

The Duties of the Personal Representative

The personal representative, whether designated by the will or appointed by the court, plays a critical role in managing the estate through the probate process. Their responsibilities range from gathering and protecting the estate's assets, paying debts and taxes, to distributing the remaining assets to the rightful heirs or beneficiaries.

Debts of the Decedent

One of the roles of the personal representative of the estate (also known as the executor if there's a will, or administrator if there's no will) is to settle the decedent's debts using funds from the estate. They are also responsible for handling other financial obligations, such as filing the deceased's final income tax return and paying any estate taxes.

Imagine your late aunt designated you as her will's executor. You would be tasked with identifying all her debts, paying them off using the estate's assets, and filing her final income tax return, among other tasks.

When a Will is Contested

A will contest occurs when someone challenges the validity of the will during probate. This could be due to various reasons, such as the deceased lacking mental capacity at the time of writing the will or the existence of a newer will. A will contest can significantly lengthen the probate process and may even lead to legal battles.

Providing Proper Notice

The probate process necessitates providing proper notice to potential creditors and interested parties. The personal representative must publish a notice in a local newspaper to inform unknown creditors as well as directly notify known creditors. This helps ensure that all valid debts against the estate are settled before the distribution of assets to the heirs.

Completing and Filing the Inventory and Appraisal

The personal representative is also tasked with completing an inventory and appraisal of the estate assets. This inventory includes all the decedent's property and needs to be filed with the court. The appraisal of the majority of assets is typically done by a probate referee who determines their fair market value.

Petition for Final Distribution with or without Account

After all the assets have been accounted for, debts paid, and taxes handled, the personal representative files a petition for final distribution with the court. This document outlines how the remaining assets will be distributed to the heirs or beneficiaries, either in accordance with the will or as per the state's intestacy laws.

Discharge of the Personal Representative

The last step in the probate process is the discharge of the personal representative. Once the court approves the final distribution and all tasks have been completed, the personal representative is discharged, marking the official end of their duties and responsibilities related to the estate.