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California Probate Information and Laws

Table of Contents
The Probate Process
Exceptions to Probate
Estates Where There is No Will
Attorney and Executor Fees
Bonds
Inventory and Appraisal
Notifying Creditors and Dealing With Creditor Claims
Sales of Real Estate and the Independent Administration of Estates Act
Account, Report and Petition for Distribution
  1. The Probate Process.

    Probate is the process by which the Probate Court handles a deceased person's estate if there is no trust; it applies if there is a will only, or if there is no will. (One of the primary reasons for having a trust is to distribute the estate without having to go through probate.) Essentially a probate petition is filed with the Court, creditors are notified, the personal representative lists all of the estates assets and liabilities, a probate referee appraises the assets, any disputes relating to the estate are settled, a final accounting is made, the creditors are paid and then the remainder is paid to the beneficiaries.

    1. Time. Probate often takes 8 to 10 months, although it can take even longer. During that time, if the family needs money from the estate, a motion has to be brought and a court order obtained.

    2. Terminology. The person handling the estate is called the "executor" if there is a will or the "administrator" if there is no will or no executor is named in the will. "Personal representative" or "estate representative" (or just "representative") refers to either an executor or an administrator.

  2. Exceptions to Probate.

    1. Trusts. No probate is required if the estate is primarily owned by a trust. Note, though, that in this case if the trust owns real estate one or more filings often need to be made with the county recorders office to remove the deceased's name from the title. If more than $100,000 in gross assets (with certain exceptions, discussed below) are outside the trust, though, then probate may still be needed.

    2. Where All Property Goes to the Spouse. If there is no trust covering the property, then it may be possible to file only a spousal petition (versus going through a full-blown probate) if the surviving spouse has 100% unqualified ownership of the real property (meaning there are no co-owners, it is not merely a life-estate, etc.). Usually this requires either a will giving 100% of the property to the surviving spouse and/or the title to any property having been held by the spouses in joint tenancy (with right of survivorship) or community property with right of survivorship. If this is not the case, then a probate is almost always required.

    3. Estates Worth Less Than $100,000. If, though, the gross value of the estate is $100,000 or less (without subtracting any liens, debts, deeds of trust, etc.), there are simple procedures for distributing an estate without using formal probate proceedings. Certain items are excluded from the calculation of the $100,000. Some of these are:

      1. Joint tenancy property (real or personal);

      2. Community property with right of survivorship;

      3. Half of all other community property;

      4. Life insurance and death benefits (assuming that beneficiaries are named);

      5. Real property outside of California;

      6. Any motor vehicles.

      7. Multiple party accounts.

    4. Where Probate May Still Be Advisable. Even in these cases, probate still may be appropriate, though, if there are strained family relations, complex investments, large or complex claims by creditors, or an interest in a good-sized business.

  3. Estates Where There Is No Will.

    Where the decedent died intestate (without a will), California law generally distributes the estate as follows:

    1. If there is a surviving spouse, that spouse receives:

      1. All community property.

      2. As to the decedent's separate property (if any):

        1. All of it if the decedent did not leave any surviving issue, parent, brother, sister, or issue of a deceased brother or sister.

        2. One half if the decedent has only one child or has one deceased child with issue.

        3. One half if the decedent leaves no issue but leaves a parent or parents – or leaves their issue or the issue of either of them.

        4. One-third if the decedent leaves more than one child, leaves one child and the issue of one or more deceased children, or leaves issue of two or more deceased children.

    2. The rest goes first to the decedent's surviving children or, if any of them are deceased, to the children's surviving issue.

    3. If the decedent has no surviving children or deceased children with surviving issue, the rest goes to:

      1. The decedent's parents, if living.

      2. The decedent's brothers and sisters (or their issue if any of them are deceased).

  4. Attorney and Executor Fees.

    1. Attorneys' fees for handling a probate are set by California statute and are based on the gross estate, meaning that there is no subtraction for any liens, debts, deeds of trust, etc.

      1. The amount is based on a sliding percentage as follows:

        1. Four percent on the first one hundred thousand dollars ($100,000).

        2. Three percent on the next one hundred thousand dollars ($100,000).

        3. Two percent on the next eight hundred thousand dollars ($800,000).

        4. One percent on the next nine million dollars ($9,000,000).

        5. One-half of 1 percent on the next fifteen million dollars ($15,000,000).

        6. For all amounts above twenty-five million dollars ($25,000,000), a reasonable amount to be determined by the court.

      2. For example, if the estate is a house worth $700,000, then the probate fees for the attorney will be $17,000 ($4,000 + $3,000 + $10,000) – regardless of the size of any loans against the property.

      3. If extraordinary services are required, the attorney may be able to recover additional amounts.

      4. This, of course, is a major reason for having a trust so that the estate can be distributed without having to go through probate.

    2. The executor of a will is also entitled to the same amount of statutory fees unless the will does no allow them, although the executor can waive those fees if he/she wishes (and family members often do).

  5. Bonds.

    Generally, unless there is a will that designates an executor and waives the bond, the personal representative must post a bond to guarantee that he/she will fulfill his/her duties.

    1. If the person is out of state, the Court will generally require a bond even if the will waives it.

    2. Even if the will does not waive the bond, if all interested parties request in writing that the bond be waived and the written waivers are attached to the petition, the bond will usually be waived.

    3. In estates that require a bond, the Court will generally set the bond equal to the amount of the equity in the property plus the value of the personal property, plus twice the value of the annual income from all estate property.

    4. The premium for the bond is often approximately one percent (1%) of this total. Note that most bonding companies will not issue a bond if the personal representative is not formally represented by an attorney.

  6. Inventory and Appraisal.

    One of the first things that the personal representative does is file an inventory with the Court of all the assets of the estate that are covered by the probate. Assets that are not subject to probate (for example, joint-tenancy property with right of survivorship) are not listed.

    1. Generally at the beginning of the probate a probate referee is also appointed to make an appraisal of the estate assets. While it is possible to seek a waiver from the Court of the appraisal by the probate referee, good cause must be shown (such as the only items in the estate are the deceased's personal effects, which are minimal, and one piece of real property that has recently been independently appraised).

    2. Often the personal representative sends a letter to the probate referee with basic facts regarding each major asset in order to avoid delay and mistakes.

    3. The probate referee is compensated by a commission of 1/10 of 1 percent of the total value of the assets appraised, with a minimum fee of $75 and a maximum fee of $10,000. If the reasonable value of the referee's services is more, the referee can petition for a higher amount.

  7. Notifying Creditors and Dealing With Creditor Claims.

    1. Newspaper Publication of the Petition for Probate. The notice of the petition to administer the estate must be published in a newspaper. In many cases the newspaper can be a free weekly advertising publication. Proof of the publication must be filed with the Court before the hearing on the petition for probate is held

    2. Notice to Specific Creditors. The personal representative must give notice directly to reasonably ascertainable creditors before the later of i) four months after the date of issuance of the "letters" appointing the representative or ii) 30 days after the personal representative first becomes aware of the creditor. Proof of the notice to each creditor must be filed with the Court.

    3. Time Limits for Creditors to File Claims. Each creditor must file a claim. The general rule is that a creditor's claim is barred if it is not filed by the later of i) four months after issuance of the "letters" appointing the personal representative or ii) 60 days after the date that specific notice is given to that creditor. Creditors must file their claims with the Court and serve a copy on the personal representative.

      1. In addition, all creditor lawsuits must be commenced within one year after the date of death. This deadline is extended, though, if the creditor files a timely claim and in certain other limited situations.

    4. Allowance and Rejection of Claims. The personal representative must file and serve any allowance or rejection of a claim.

      1. If a claim is rejected, the creditor must bring a lawsuit in the proper court within three months of the date of service of the notice of rejection (or within three months after the claim becomes due, if that is later) or the claim is barred. If suit is brought, the plaintiff must notify the personal representative.

      2. If the personal representative does not reject a claim within 30 days after the claim is filed, the claimant may deem the claim rejected and file a lawsuit. The estate cannot be closed while there are unresolved filed claims, so some creditors are content to wait for an eventual approval by the personal representative.

      3. The personal representative and the claimant may agree in writing that to refer the claim to a temporary judge. The hearing on the claim is then heard without pleadings, discovery or jury and the determination has the effect of a judgment.

  8. Sales of Real Estate and the Independent Administration of Estates Act.

    Selling real estate is often the biggest job that a personal representative has.

    1. With one exception, if the personal representative (executor) wishes to sell real property that is part of the probate estate, the property can only be sold with Court approval and notice to those who have an interest in the property – and the sales price must be for at least 90% of the appraised value.

    2. The one exception is where the personal representative has been given authority to act under the Independent Administration of Estates Act (IAEA) and the property is not being purchased by the personal representative or his/her attorney. In that situation the "at least 90%" rule and the requirement that the personal representative "obtain the highest and best price for the property reasonably attainable" do not apply .

      1. The request for authority under the IAEA may be made at any time, though this is usually done as part of the initial petition for probate.

      2. Any interested party can object to the grant of authority, although the Court must grant the authority unless an objecting party can show good cause.

      3. In any case, the personal representative must give notice of the sale to all affected parties. The notice must include all material terms of the transaction, including the sales price and the amount of any commission. Notice need not be given if all interested parties may sign a waiver of notice or a consent to the request for authority.

    3. With a sale of one to four units of owner-occupied property located in California where a loan secured by the property is in default, the sale agreement must comply with California's relatively intricate pre-foreclosure sale statutes. To be safe, anyone indicated in any will as receiving an interest in the property, any surviving spouse and anyone receiving an interest under the intestacy laws (if there is no will) should be considered an owner.

  9. Account, Report and Petition for Distribution.

    The personal representative must file the final accounting, a report and a petition for distribution when there are sufficient funds to pay all debts, the time for filing creditors' claims has expired, and the estate is ready to be closed.

    1. The requirement of filing an accounting (though not the report or petition for distribution) can be waived if all person entitle to any distribution from the estate sign and file a written waiver or a written acknowledgment of receipt of their share of the estate.

    2. With the accounting, the representative accounts for the financial transactions that have happened since his/her appointment (or since the last account, if an account has been filed with the court previously).

    3. The representative also must file a report on matters that are not self-explanatory from the exhibits. This includes actions taken under the Independent Administration of Estates Act.

    4. Finally, the representative petitions for approval of the accounting, approval of his/her acts, compensation for the attorney and the representative (if allowed) and distribution of the estate.

Learn more with these other estate planning and probate articles: Probate | Asset Protection | Living Wills | Wills, Trusts, and Durable Powers of Attorney 
 

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