The California probate process involves many aspects that you may not be familiar with. This process is essential in distributing the estate upon the decedent’s death. What the decedent wants should always be prioritized, especially when it comes to the property he owned and worked hard for in their lifetime.
Probate proceedings can either be testate or intestate. The kind of proceeding usually determines the length of time it will take to settle the estate.
- Testate proceedings are those that are handled according to the decedent’s will. Testate proceedings usually take between six and twelve months to complete. However, filing an appeal can cause this timeframe to extend.
- Intestate proceedings occur when the decedent dies without a will or no evidence of a valid will. This usually takes around twelve months to two years. Intestate proceedings tend to be more complicated than testate proceedings and thus may take longer to settle.
The will is the most important document during the probate process, and it will state how the decedent’s assets should be distributed.
The deceased’s real property and personal property are distributed in different manners. This is why probate proceedings are essential for managing all these properties and their proper distribution. The law recognizes the importance of this process, and the court will usually set a period for its completion.
The Probate Process in California
The probate process under California law is very intricate, and a violation of a particular provision can have dire consequences. The deceased’s heirs, beneficiaries, and other claimants to the estate should submit claims with the court within four months after the decedent has died. If claims are not submitted within this time frame, the court may not hear them, and the estate will be distributed without their participation.
Next is also to determine if probate proceedings are necessary. If the estate does not have any real property or all of the decedent’s debts are paid, no probate will be required. Since this requires the proceedings to be supervised by a court, it is advisable to consult with an experienced probate attorney in California.
The probate process usually starts with issuing Letters Testamentary by the superior court. A petition for probate before the probate court is also necessary, and the executor or administrator must post a bond. The petition will list the following:
- name of the decedent;
- the date of death as indicated in the death certificate;
- the names and addresses of the heirs and beneficiaries; and
- a description of the assets in the estate.
The stages of the proceedings and important deadlines are as follows:
Appointment by Court
Upon filing the petition for probate, the court then appoints a personal representative to administer the estate. If the decedent left a will, the court usually appoints the person named as the personal representative. If there is no will or the person appointed in the will declines to serve, the court appoints another person as a personal representative.
The said representative can either be an individual or a business entity. The personal representative is entrusted with the fiduciary duty to act in the best interests of the decedent’s estate and all interested persons. A personal representative is personally liable for any breach of fiduciary duty to an injured party, but only to the extent of losses caused by that breach.
After such appointment, the court shall issue letters testamentary or letters of administration to the personal representative. The letters testamentary authorize the personal representative to administer the estate, including paying debts and distributing assets to beneficiaries. The letters of administration are similar but issued when there is no will.
The surviving spouse and other heirs and beneficiaries should cooperate to settle and distribute assets.
Determining the Assets
The estate’s assets shall all be gathered and determined by the personal representative. This process is done through the accountings of all the property. Also, taking an inventory of the estate’s assets is essential. The probate court will require a list of the creditors and their addresses and the value of each asset.
The personal representative must notify all interested parties, including heirs and known creditors. All personal and real property shall be listed in the notice. Such notice shall include the time and place of the hearing.
The duration of this process will depend on how many assets there are and how cumbersome they are to determine and sell. This process can take anywhere from a few months to two years and longer in the case of real estate.
Paying Liabilities and Debts
The next step is the payment of all liabilities and debts of the estate. The death of a person does not extinguish all of his liabilities. The law also protects the interests of innocent creditors who are not privy to the decedent’s estate planning. The executor must give notice to all known creditors of the estate. There is a four-month waiting period in California before the creditor can file a claim against the estate.
All outstanding debts shall be accounted for in the estate, including any outstanding income taxes. There are instances when creditors fraudulently allege that their debts are unpaid when paid in full. The personal representative, executor, or special administrator determines whether such unpaid debts are valid debts.
As mentioned, the estate liabilities are not just debts but also taxes. These taxes are generally the responsibility of the executor. The executor must file an estate tax return with the IRS within nine months of the decedent’s death.
The payment of other taxes, such as income and gift taxes, may also be due at this time. The personal representative is responsible for ensuring all these taxes are paid on time.
Selling of Estate Assets
The decedent’s assets must be appraised, and estate assets must be sold under the supervision of a court-appointed Personal Representative. The proceeds from the sale of the decedent’s assets will first be used to pay funeral expenses and estate debts. The personal representative should obtain court approval for any sale of estate assets.
Appraisal of Assets
It is important to have a complete and accurate appraisal of the estate’s assets. The Personal Representative should appoint an appraiser to appraise all the estate’s assets. The appraiser’s fees should be paid from the estate.
Under the provisions of the Independent Administration of Estates Act, a Personal Representative is authorized to take action without court supervision when selling estate assets at fair market value. The personal representative is mandated to notify the court and notify the heirs of the sale of the decedent’s assets within 15 days before the date of sale.
Under the laws of intestate succession, the remaining assets shall be distributed to the heirs under the will or, if there is no will.
The payment of taxes is an indispensable requirement in settlement of a decedent’s estate. The state has an interest in the orderly transfer of the decedent’s property at death, and the payment of taxes is a means of ensuring this.
The executor shall be liable for the deficiencies in the decedent’s taxes, which are payable at the time of the decedent’s death. The Internal Revenue Service shall enforce this liability against the executor unless excused following the provisions of Internal Revenue Code § 6902(b).
It is also important to remember the exempt status of some transfers to qualifying charities. At times, this can be more beneficial than taking an estate tax deduction.
The following are some of the tax returns required to be filed:
- Federal Estate Tax. When the decedent’s total taxable estate exceeds the federal estate tax exemption amount, a return must be filed. It can usually be filed after the decedent died in which the executor of an estate is responsible for filing this return. The due date is nine months after the decedent’s death.
- Fiduciary Income Tax Returns. The estate’s revenue is not included on the deceased person’s personal income tax return if it comes in after the date of death. Such income should be indicated in a fiduciary income tax return. The representative has the duty to file this return even if all of the estate’s income is exempt from taxation. If required, a fiduciary income tax return will be filed for the year in which the decedent died and any subsequent years up to four years.
- Personal Income Tax Return. All income earned before the decedent’s death is taxable to the decedent. If the decedent died in the middle of the year, the income tax return should include the start of the year until the decedent’s death date. The final return may include deductions for medical expenses incurred within one year of death. All other deductions must have been paid before death to be allowed. Taxes should be reviewed for accuracy shortly after a person’s death since they are generally missed until late in the tax season.
- Other Relevant Taxes. Other taxes that are due include the real estate tax, donor’s tax, and sales tax in case of the sale of the properties.
Concluding the Estate
The main goal of this phase is to wrap up the decedent’s affairs and distribute his property among his heirs. The final distribution shall not commence without the proper inventory and appraisal of the estate. The heirs, creditors, and other beneficiaries shall be notified of the final accounting.
A petition shall be filed to the court for the final distribution, and a hearing shall be set. The petition shall include a list of the heirs, their addresses, and their relationship to the decedent. The petition must also state the estate’s value and how it is to be distributed.
The period for all the proceedings can take from two to six months, depending on the court’s schedule and the case’s complexity. If fiduciary taxes are due, this period can take up to 12 – 18 months.
Assets Subject to Probate
The decedent has to have assets in California that are subject to probate. If the decedent only had assets outside of California, those assets would not be subject to probate in California.
Generally, the types of assets that are subject to probate are the following:
- Those properties that are in the name of the deceased person alone;
- One half of the community property with the right of survivorship;
If there is a trust, whether revocable or irrevocable, if the decedent has funded the trust in such a way that makes any of it subject to probate;
- Real property located in California that was owned by the decedent’s sole name or jointly with another person;
- Personal property in California that belonged to the decedent’s sole name or jointly with another person.
The determination of assets subject to probate can be best made by consulting with an experienced California Probate Attorney. Probate attorneys are equipped with the necessary knowledge and experience in handling the complexities of the Probate process.
Assets Not Subject to Probate
Unfortunately, the law protects some of the deceased’s assets from probate proceedings. This protection aims to ensure that the deceased’s loved ones can continue to use and enjoy these assets without interference from the courts. The most common types of assets that are not subject to probate are:
- Property that is held in joint tenancy with right of survivorship;
- Assets that have a designated beneficiary, such as life insurance policies or retirement accounts;
- Assets that are payable on death to a beneficiary or beneficiaries, such as bank accounts and Certificate of Deposits;
- Assets that are held in a living trust;
- Assets that are part of the community property of the deceased and their spouse.
It is important to remember that these assets are not entirely free from the court’s involvement. You will need to provide evidence that you own these assets and that the decedent no longer possesses them, such as a copy of your deed for real estate or a statement from the company holding your policy.
A probate lawyer can help you with the complex process of filing the necessary paperwork to ensure that your assets are not subject to court proceedings and that the decedent’s creditors cannot claim interest upon them.
Is It Possible to Probate a Will Faster in California?
The immediate commencement and conclusion of probate proceedings are possible in California, but it is not always the best choice for all estates. The court may order that an estate be subject to summary administration if all interested parties agree and the assets of the estate are not contested.
If there is a will, it must be filed with the court and a petition for summary administration. If there is no will, the administrator must apply to formal administration.
The California probate code lays down how the assets of an estate should be administered.
If it is not contested, there are no creditors to pay, and all interested parties agree to distribute the estate’s assets. Probate proceedings can be effectively closed within two months after filing with the court. If any interested party does not agree or outstanding debts need to be paid, then the distribution of assets can take up to six months.
The relatives of the deceased must understand that they are still liable for claims on his estate after it is declared intestate, even if they have received an inheritance. The only way to free them from liability is by making sure that all creditor’s claims are paid in full.
Is There a Way I Can Avoid Probate in California?
A probate proceeding is NOT necessary when two conditions are met:
1. The deceased person’s assets pass directly to their heirs
2. All debts have been paid before the assets in a probate estate are distributed to the heirs according to a valid will or through intestacy
If these conditions apply, there is no need for a formal probate proceeding where all creditors are notified and allowed to file a claim.
A petition for probate is filed when the deceased person did not leave a will, or the will is contested and to have an executor appointed.
What Happens If You Don’t File Probate in California?
The primary aim of probate proceedings is to protect the interests of creditors and heirs. Probate involves determining assets and distributing assets to the heirs and beneficiaries. The creditors have a compelling interest in making sure their claims are satisfied.
All these will be done outside of a judicial system without probate proceedings, potentially exposing the creditors and heirs to different risks. The risks include:
- No protection against the fraudulent conveyance of assets;
- Creditors can’t claim assets that don’t pass through probate;
- A person who doesn’t participate in the court proceedings can’t challenge distributions made to heirs;
- The personal representative of a non-probated estate isn’t compensated for their services unless they give a signed statement agreeing to a fee; and
- The correct value of both the decedent’s real property and personal property may be challenging to establish.
These risks can be mitigated or prevented with the help of an experienced probate lawyer. Probate proceedings bind creditors and interested parties, protecting them from claims that might be made against un-probated assets. The primary advantage of probate proceedings is maintaining a clear record of the state in which the decedent’s estate exists.
Should I Hire a Probate Attorney Near Me?
The probate proceedings are necessary to determine which parties are entitled to inherit the deceased’s property. This process can be challenging since many things to do and understand. Fortunately, you don’t have to do it alone. Probate lawyers are there to help you in all stages of the proceedings.
Obtain legal advice from a probate lawyer to know your rights and duties. It can be inconvenient and daunting to know that your deceased spouse or relative has outstanding debts that require settling. This is just one of the reasons why a probate lawyer is needed in settling the liabilities of a deceased.
Some of the more critical reasons why you need probate lawyers are the following:
- Probate lawyers will address the issue of property to be probated. This is usually done through a court-assisted process where all interested parties are required to submit their claims regarding the estate. Legal advice from an experienced probate attorney can save you time and effort.
- Probate lawyers can investigate the deceased’s financial records. Some people tend to make poor decisions regarding money. Therefore they often have outstanding debts that need settling. A probate lawyer has the required expertise in investigating the financial records to determine who will be held liable for the payment of his debts.
- The creditors’ concerns are addressed. Creditors are often the most vocal group during probate proceedings. Probate lawyers know how to handle creditor concerns and protect their interests.
- Proper distribution of assets. Since probate lawyers are experts in the law, they are aware of all legal requirements that need to be followed when distributing an estate.