| 1. The Probate Process. Probate is the process by | | | | attorney. |
| which the Probate | | | | 6. Inventory and Appraisal. One of the first things |
| Court handles a deceased person's estate if there | | | | that the personalrepresentative does is file an |
| is no _trust_; itapplies if there is a will only, or if | | | | inventory with the Court of all theassets of the |
| there is no will. (One of theprimary reasons for | | | | estate that are covered by the probate. Assets |
| having a trust is to distribute the estate | | | | that arenot subject to probate (for example, |
| withouthaving to go through probate.) Essentially a | | | | joint-tenancy property with rightof survivorship) |
| probate petition is filedwith the Court, creditors | | | | are not listed.a. Generally at the beginning of the |
| are notified, the personal representativelists all of | | | | probate a probate referee is alsoappointed to |
| the estates assets and liabilities, a probate | | | | make an appraisal of the estate assets. While it |
| refereeappraises the assets, any disputes relating | | | | ispossible to seek a waiver from the Court of the |
| to the estate are settled, afinal accounting is | | | | appraisal by the probatereferee, good cause must |
| made, the creditors are paid and then the | | | | be shown (such as the only items in the |
| remainderis paid to the beneficiaries.a. Time. | | | | estateare the deceased's personal effects, which |
| Probate often takes 8 to 10 months, although it | | | | are minimal, and one piece ofreal property that |
| can take evenlonger. During that time, if the | | | | has recently been independently appraised).b. |
| family needs money from the estate, amotion | | | | Often the personal representative sends a letter |
| has to be brought and a court order obtained.b. | | | | to the probatereferee with basic facts regarding |
| Terminology. The person handling the estate is | | | | each major asset in order to avoiddelay and |
| called the "executor"if there is a will or the | | | | mistakes.c. The probate referee is compensated |
| "administrator" if there is no will or noexecutor is | | | | by a commission of 1/10 of 1percent of the total |
| named in the will. "Personal representative" or | | | | value of the assets appraised, with a minimum |
| "estaterepresentative" (or just "representative") | | | | feeof $75 and a maximum fee of $10,000. If the |
| refers to either an executoror an administrator. | | | | reasonable value of thereferee's services is more, |
| 2. Exceptions to Probate.a. Trusts. No probate is | | | | the referee can petition for a higher amount. |
| required if the estate is primarily owned by atrust. | | | | 7. Notifying Creditors and Dealing With Creditor |
| Note, though, that in this case if the trust owns | | | | Claims.a. Newspaper Publication of the Petition for |
| real estate oneor more filings often need to be | | | | Probate. The notice of thepetition to administer |
| made with the county recorders officeto remove | | | | the estate must be published in a newspaper. |
| the deceased's name from the title. If more than | | | | Inmany cases the newspaper can be a free |
| $100,000 ingross assets (with certain exceptions, | | | | weekly advertising publication. |
| discussed below) are outside thetrust, though, | | | | Proof of the publication must be filed with the |
| then probate may still be needed.b. Where All | | | | Court before the hearingon the petition for |
| Property Goes to the Spouse. If there is no trust | | | | probate is heldb. Notice to Specific Creditors. The |
| coveringthe property, then it may be possible to | | | | personal representative must givenotice directly |
| file only a spousal petition | | | | to reasonably ascertainable creditors before the |
| (versus going through a full-blown probate) if the | | | | laterof i) four months after the date of issuance |
| surviving spouse has | | | | of the "letters" appointingthe representative or ii) |
| 100% unqualified ownership of the real property | | | | 30 days after the personal representativefirst |
| (meaning there are noco-owners, it is not merely | | | | becomes aware of the creditor. Proof of the |
| a life-estate, etc.). Usually this requireseither a will | | | | notice to eachcreditor must be filed with the |
| giving 100% of the property to the surviving | | | | Court.c. Time Limits for Creditors to File Claims. |
| spouse and/orthe title to any property having | | | | Each creditor must file aclaim. The general rule is |
| been held by the spouses in jointtenancy (with | | | | that a creditor's claim is barred if it isnot filed by |
| right of survivorship) or community property with | | | | the later of i) four months after issuance of the |
| right ofsurvivorship. If this is not the case, then a | | | | "letters"appointing the personal representative or |
| probate is almost alwaysrequired.c. Estates Worth | | | | ii) 60 days after the datethat specific notice is |
| Less Than $100,000. If, though, the gross value | | | | given to that creditor. Creditors must filetheir |
| of theestate is $100,000 or less (without | | | | claims with the Court and serve a copy on the |
| subtracting any liens, debts, deedsof trust, etc.), | | | | personal representative.i. In addition, all creditor |
| there are simple procedures for distributing an | | | | lawsuits must be commenced within one year |
| estatewithout using formal probate proceedings. | | | | after the date of death. This deadline is extended, |
| Certain items are excludedfrom the calculation of | | | | though, if thecreditor files a timely claim and in |
| the $100,000. Some of these are:i. Joint tenancy | | | | certain other limited situations.d. Allowance and |
| property (real or personal);ii. Community property | | | | Rejection of Claims. The personal representative |
| with right of survivorship;iii. Half of all other | | | | mustfile and serve any allowance or rejection of a |
| community property;iv. Life insurance and death | | | | claim.i. If a claim is rejected, the creditor must |
| benefits (assuming that beneficiaries arenamed);v. | | | | bring a lawsuit in theproper court within three |
| Real property outside of California;vi. Any motor | | | | months of the date of service of the notice |
| vehicles.vii. Multiple party accounts.d. Where | | | | ofrejection (or within three months after the |
| Probate May Still Be Advisable. Even in these | | | | claim becomes due, if thatis later) or the claim is |
| cases, probatestill may be appropriate, though, if | | | | barred. If suit is brought, the plaintiff mustnotify |
| there are strained familyrelations, complex | | | | the personal representative.ii. If the personal |
| investments, large or complex claims by creditors, | | | | representative does not reject a claim within |
| oran interest in a good-sized business. | | | | 30days after the claim is filed, the claimant may |
| 3. Estates Where There Is No Will. Where the | | | | deem the claim rejectedand file a lawsuit. The |
| decedent died intestate | | | | estate cannot be closed while there areunresolved |
| (without a will), California law generally distributes | | | | filed claims, so some creditors are content to wait |
| the estate asfollows:a. If there is a surviving | | | | for aneventual approval by the personal |
| spouse, that spouse receives:i. All community | | | | representative.iii. The personal representative and |
| property.ii. As to the decedent's separate | | | | the claimant may agree in writing that to refer |
| property (if any): | | | | the claim to a temporary judge. The hearing on |
| (1) All of it if the decedent did not leave any | | | | the claimis then heard without pleadings, discovery |
| surviving issue, parent, brother, sister, or issue of | | | | or jury and the determinationhas the effect of a |
| a deceased brother or sister. | | | | judgment. |
| (2) One half if the decedent has only one child or | | | | 8. Sales of Real Estate and the Independent |
| has one deceased child with issue. | | | | Administration of Estates |
| (3) One half if the decedent leaves no issue but | | | | Act. Selling real estate is often the biggest job |
| leaves a parent or parents - or leaves their issue | | | | that a personalrepresentative has.a. With one |
| or the issue of either of them. | | | | exception, if the personal representative |
| (4) One-third if the decedent leaves more than | | | | (executor) wishesto sell real property that is part |
| one child, leaves one child and the issue of one or | | | | of the probate estate, the propertycan only be |
| more deceased children, or leaves issue of two or | | | | sold with Court approval and notice to those who |
| more deceased children.b. The rest goes first to | | | | have aninterest in the property - and the sales |
| the decedent's surviving children or, if anyof them | | | | price must be for at least 90%of the appraised |
| are deceased, to the children's surviving issue.c. If | | | | value.b. The one exception is where the personal |
| the decedent has no surviving children or | | | | representative has been givenauthority to act |
| deceased children withsurviving issue, the rest | | | | under the Independent Administration of Estates |
| goes to:i. The decedent's parents, if living.ii. The | | | | Act |
| decedent's brothers and sisters (or their issue if | | | | (IAEA) and the property is not being purchased |
| any of them are deceased). | | | | by the personalrepresentative or his/her attorney. |
| 4. Attorney and Executor Fees.a. Attorneys' fees | | | | In that situation the "at least 90%"rule and the |
| for handling a probate are set by California | | | | requirement that the personal representative |
| statuteand are based on the gross estate, | | | | "obtain thehighest and best price for the property |
| meaning that there is no subtractionfor any liens, | | | | reasonably attainable" do notapply .i. The request |
| debts, deeds of trust, etc.i. The amount is based | | | | for authority under the IAEA may be made at |
| on a sliding percentage as follows: | | | | any time,though this is usually done as part of the |
| (1) Four percent on the first one hundred | | | | initial petition for probate.ii. Any interested party |
| thousand dollars ($100,000). | | | | can object to the grant of authority, although the |
| (2) Three percent on the next one hundred | | | | Court must grant the authority unless an |
| thousand dollars ($100,000). | | | | objecting party can showgood cause.iii. In any |
| (3) Two percent on the next eight hundred | | | | case, the personal representative must give |
| thousand dollars ($800,000). | | | | notice of the sale to all affected parties. The |
| (4) One percent on the next nine million dollars | | | | notice must include all material termsof the |
| ($9,000,000). | | | | transaction, including the sales price and the |
| (5) One-half of 1 percent on the next fifteen | | | | amount of anycommission. Notice need not be |
| million dollars ($15,000,000). | | | | given if all interested parties may signa waiver of |
| (6) For all amounts above twenty-five million | | | | notice or a consent to the request for authority.c. |
| dollars ($25,000,000), areasonable amount to be | | | | With a sale of one to four units of |
| determined by the court.ii. For example, if the | | | | owner-occupied property locatedin California |
| estate is a house worth $700,000, then | | | | where a loan secured by the property is in |
| theprobate fees for the attorney will be $17,000 | | | | default, thesale agreement must comply with |
| ($4,000 + $3,000 + | | | | California's relatively intricatepre-foreclosure sale |
| $10,000) - regardless of the size of any loans | | | | statutes. To be safe, anyone indicated in any |
| against the property.iii. If extraordinary services | | | | willas receiving an interest in the property, any |
| are required, the attorney may be able to | | | | surviving spouse andanyone receiving an interest |
| recover additional amounts.iv. This, of course, is a | | | | under the intestacy laws (if there is nowill) should |
| major reason for having a trust so that the | | | | be considered an owner. |
| estate can be distributed without having to go | | | | 9. Account, Report and Petition for Distribution. |
| through probate.b. The executor of a will is also | | | | The personalrepresentative must file the final |
| entitled to the same amount ofstatutory fees | | | | accounting, a report and a petitionfor distribution |
| unless the will does no allow them, although the | | | | when there are sufficient funds to pay all debts, |
| executorcan waive those fees if he/she wishes | | | | thetime for filing creditors' claims has expired, and |
| (and family members often do). | | | | the estate is readyto be closed.a. The |
| 5. Bonds. Generally, unless there is a will that | | | | requirement of filing an accounting (though not the |
| designates an executorand waives the bond, the | | | | report orpetition for distribution) can be waived if |
| personal representative must post a bond | | | | all person entitle to anydistribution from the |
| toguarantee that he/she will fulfill his/her duties.a. | | | | estate sign and file a written waiver or a |
| If the person is out of state, the Court will | | | | writtenacknowledgment of receipt of their share |
| generally require abond even if the will waives it.b. | | | | of the estate.b. With the accounting, the |
| Even if the will does not waive the bond, if all | | | | representative accounts for the |
| interested partiesrequest in writing that the bond | | | | financialtransactions that have happened since his |
| be waived and the written waivers areattached | | | | her appointment (or since thelast account, if an |
| to the petition, the bond will usually be waived.c. In | | | | account has been filed with the court previously).c. |
| estates that require a bond, the Court will | | | | The representative also must file a report on |
| generally set the bondequal to the amount of the | | | | matters that are notself-explanatory from the |
| equity in the property plus the value of | | | | exhibits. This includes actions taken underthe |
| thepersonal property, plus twice the value of the | | | | Independent Administration of Estates Act.d. |
| annual income from allestate property.d. The | | | | Finally, the representative petitions for approval of |
| premium for the bond is often approximately one | | | | the accounting,approval of his/her acts, |
| percent (1%) ofthis total. Note that most bonding | | | | compensation for the attorney and |
| companies will not issue a bond ifthe personal | | | | therepresentative (if allowed) and distribution of |
| representative is not formally represented by an | | | | the estate. |