What is Probate?

Probate is the legal process of appointing a person to administer an estate, determining whether a valid will is in existence, marshalling the assets of the decedent, notifying and paying off creditors and distributing the remaining assets, if any, to either the beneficiaries designated by the decedent in his or her Will or by the state under the laws of intestacy of the decedent’s state of residency at death.

As part of the initial petition process, a series of publications notifying the public of the fact of the death of the decedent and that a probate of the decedent’s estate is being initiated is published in a local newspaper that is designated for such publication.

If a Will exists, the Will is docketed with the court, a petition for probate of the estate is filed with the court, and the court is requested to approve the appointment of the executor designated under the Will.

If no Will exists, a petition for administration of the estate is filed with the court. The petition nominates an administrator of the estate, usually a relative of the decedent, for approval by the court.

Once approved, the executor or administrator is given Letters Testamentary or Letters of Administration (“Letters”) as proof of the ability of the executor / administrator to manage the probate process. The executor / administrator marshalls the assets in the name of the decedent and files an Inventory and Appraisement with the Probate Court.

Creditors are given four months from the issuance of Letters to file their claims. After a creditor claim is received, the executor/ administrator must either approve it, deny it or attempt to negotiate a educed payoff in full satisfaction of the claim. If the claim is denied, the creditor has ninety days to sue to enforce the claim. After the time to file a creditor claim expires and the other requirements of a probate administration are fulfilled, the executor / administrator can file her or her Final Report with the court, request court approval of the actions taken and distribute the remainder of the estate as ordered by the court.

Doesn’t Having a Will Avoid Probate?

No. By using a Will as the central planning document of your estate plan, the person is virtually assuring his or her estate will need to be probated after his or her death.

How Long Does a Probate Take?

Because of time delays between the time of filing documents with the court and the hearing related to the subject matter of those documents (usually 45 to 60 days in the Riverside and San Bernardino County Probate Courts), as well as the mandatory four month creditor claim period, a probate administration will take a minimum of seven to eight months to go from initial filing to approval of the Final Report and distribution of assets to beneficiaries. A typical probate takes a little longer, usually between twelve to eighteen months. With the downturn in the real estate market, many probates that consist largely of the residence of the decedent are now taking two or more years to go from start to finish. The longest probate in U.S. history, the probate of Marilyn Monroe’s estate, took over eighteen years to go from start to finish.

How Much Does it Cost to Probate an Estate?

Probates are expensive. The regular fees paid to the executor and the attorney for the executor, which are commonly referred to as statutory fees, are prescribed by California law. In addition to statutory fees, the executor and attorney for the executor may be entitled to extraordinary fees for services rendered beyond what is normally required in a probate administration (such as sale of a business or real property or the preparation of an estate tax return). In addition to these fees, there are filing fees, publication fees, probate referee (court appointed appraiser) fees, and certification costs. The statutory fees are based on the value of the gross estate. An example of the typical fees and costs for an estate consisting of a residence valued at $300,000 and $200,000 of various bank accounts and investments (for a total value of $500,000) follows:

Types of Fees and Costs	Amount
Statutory Executive Fees	$13,000
Statutory Attorney Fees	$13,000
Filings Fees	$650
Publication Costs	$500
Probate Referee Fees	$500
Certification and Miscellaneous Fees	$100
Typical Total Costs	$27,750

California statutory attorney and executor fees are calculated based on the gross value, not the net estate. Therefore, the statutory attorneys fees to probate a $500,000 estate with no debt is the same as the statutory probate fees to probate a $500,000 estate with $400,000 of debt, even though there is only $100,000 of net estate available for potential distribution in the latter circumstance.

The statutory attorney and executor fees are calculated as follows: 4% of the first $100,000 of gross value, 3% of the second $100,000 of gross value, 2% of the next $800,000 of value, 1% of the next $9 million of value, 0.5% of the next $15 million in value and anything over $25 million is negotiable. For example, the fee for a $250,000 would be calculated as follows: (1) the fee for the first $100,000 is $4,000 (4% of $100,000); (2) the fee for the second $100,000 is $3,000; and (3) the fee for the next $50,000 is $1,000 (2% of $50,000) – for a total fee of $8,000. This fee must be approved by the Probate Court and it is the maximum fee that can be charged. It is possible for the executor to completely waive his or her fee (many do) and for the attorney to agree in advance to reduce his or her statutory compensation.

Issues of Privacy

AT our seminars we often hear questions such as how it is that the details of Michael Jackson’s, Farrah Fawcett’s and Walter Cronkite’s Wills and their respective net worth has become public knowledge? The reason is that the probate process is a public process. The records of the court are available to creditors as well as the general public. Anyone can go to the Probate Court for the county where the decedent resided at the time of his or her death and learn details about the assets and debts of the decedent as well as the intended beneficiaries of those assets after the probate administration is complete.

Many years ago when Mr. Sandoval was teaching a financial planning class at California State University at Fullerton and he wanted to discuss the estate of John Wayne (born Marion Robert Morrison) as part of a lecture and assignment for his students. To prepare for the class, Mr. Sandoval visited the Orange County Probate Court and requested the Duke’s probate file. After waiting about an hour for the file to be located and paying the appropriate copy fees, Mr. Sandoval was able to obtain copies of the documents that he desired to make available to his students.

Privacy is the third most frequent reason, after cost and time delay, stated by our clients and seminar attendees for avoiding probate. The most frequent method used to assure privacy is through the use of trusts, as the terms of trusts are not required to be made public after the death of the individual.

Methods to Avoid Probate

There are many planning vehicles that can be used to avoid a probate administration. There are advantages and disadvantages to each of these strategies. You can learn more about all of these strategies by attending one of our free estate planning seminars or by scheduling a free consultation with one of our law firm’s estate planning attorneys:

• Joint Tenancy
• Custodial Accounts
• Payable on Death / Transfer on Death / In Trust For Accounts
• Beneficiary Designation
• Revocable Living Trusts
• Various types of Irrevocable Trusts

Call us at 951-787-7711 to schedule a free consultation or make a reservation to attend one of our estate planning seminars and learn more about the advantages and disadvantages of these various probate avoidance strategies.

Trust Administration

In many ways a trust administration is much like the probate of an estate. In the case of a trust, the creator of the trust is known as the trustor, settlor, grantor, or trustmaker. The person in charge of managing the trust is referred to as the trustee. The main difference between a probate administration and a trust administration is that a trust administration does not require court supervision – so the administration process can sometimes be completed more quickly, is not subject to the prying eyes of the public and can cost considerably less. If the trust is properly funded during the lifetime of the decedent, there is no need for a marshalling of the assets, as the assets are already titled in the name of the trust. The Successor Trustee can take over administration of the trust upon the disability or death of the decedent without the approval of the court. If desired, trust assets can be maintained under the umbrella of the trust, providing important divorce protection and creditor protection for the surviving spouse and remainder beneficiaries (for more on obtaining asset protection planning strategies, click here).

How Much Does It Cost to Administer a Trust?

The cost to administer a trust depends on many factors: (1) whether our law firm drafted the trust or it was drafted by another law firm; (2) whether the estate is subject to estate taxes or not; (3) whether the trust was fully funded and properly administered during the lifetime of the trustor(s); (4) the complexity of the trust terms; and (5) the likelihood that the terms of the trust will be challenged. In general, the fee charged by our law firm to assist the trustee in fulfilling his or her duties of administering the trust after the death of the trustor will be between 0.5% and 1% of the value of the assets being administered.

What if a Trust is Not Properly Funded?

In our estate planning seminars, Mr. Sandoval likes to compare a revocable living trust to a treasure chest. The trustee is the person who has the key to the treasure chest. However, if the trustee opens the treasure chest and the treasure chest is empty, it is as if the treasure chest does not exist. Put another way, having a revocable living trust that is unfunded is almost as bad as not having a trust at all.

To properly fund a revocable living trust, the trustor must transfer ownership of his, her or their assets to the name of the trust. For instance, after executing their revocable living trust, John and Mary Smith need to change the title to their bank accounts, investment accounts and residence from themselves as joint tenants to John Smith and Mary Smith, Trustees under the Smith Revocable Living Trust. Upon transferring title to their revocable living trust, there are no assets to be probated upon the death of the survivor of John and Mary. This is because title to the assets is in the name of the trust and the trust does not die upon the death of the survivor of John and Mary – it continues in existence.

If John and Mary do not transfer title to their trust during their lifetimes, then their assets may be subject to probate after the death of the survivor of John and Mary. Sometimes a resourceful trust attorney can avoid the need for a probate administration by bringing a special petition in the Probate Court in which the attorney requests the judge to find that the decedent’s assets were intended by the trustor to be owned by the trust (this petition is referred to as an “850 petition” or “Heggsted petition”) and order the ownership to be in the name of the trust, but this is not always possible. If this option is not available, the decedent’s assets will need to be probated. If the option is available, a court proceeding will be needed, but it will be less costly and time consuming than a traditional probate. If you are a Successor Trustee of a trust created by a decedent who resided in Riverside or San Bernardino Counties and you find that there are assets not titled in the name of the decedent’s trust, give our office a call at 951-787-7711 to speak with one of our attorneys about what your options.