December 30, 2015

How does Probate Work in California?

The term "probate" is often (rightfully or wrongfully) used in a negative connotation. For reference, probate is the judicial transfer of assets from a dead person, known as the decedent, to their heirs or beneficiaries. Typically people opt to write a trust whereby their estate will not be subject to the probate process when they pass away. While there are valid reasons to avoid probate, e.g. it is costly and time-consuming, an estate that must be probated does not result in irreparable harm. In an effort to dispel any myths or half-truths involving the probate process, the following is a brief explanation of it.

Probate can be splintered into three segments, (1) collection and appraisal of assets, (2) payment of debts and (3) distribution of the balance of the estate.

1. Collection and Appraisal of Assets

The first step is for a person to be appointed personal representative by the court to administer the estate. The personal representative can either be somebody nominated in a will, the executor, or they can be the decedent's next of kin if they wrote no will, the administrator. 

Once appointed, the personal representative has the authority to gather the decedent's assets. For example, if the decedent had a bank account, the personal representative would go to the bank and transfer it to an estate account.

When the personal representative has gathered all the assets, they can then appraise such assets. For some assets, the personal representative can appraise the asset themselves, e.g. a bank account. For other assets, the personal representative will need the assistance of a probate referee, e.g. real estate.

When the personal representative has completed collecting and appraising assets, they submit an inventory and appraisal of the decedent's estate to the probate court. 

2. Payment of Debts

Invariably the decedent will have some form of debt when they pass away. This can take the form of a credit card bill, a utility bill, a mortgage, a child support judgment, a tax lien, etc. The personal representative is required to provide notice to all creditors of the decedent's probate. Creditors then have to file a claim. The personal representative then makes a determination of whether to pay the claim or not. If there are deficiencies in the claim, e.g. it was not timely-filled, the personal representative can appropriately reject the claim. Ultimately, the personal representative needs to resolve all creditor claims before the final step can take place. 

3. Distribution of the Balance of the Estate

When all assets have been collected and appraised, all debts have been paid and a sufficient amount of time has elapsed, the personal representative can seek closure of probate.

To close probate, the personal representative will need to file a petition. It will contain a summary of what has taken place in the probate, e.g. when it started, who filed creditor claims, did the decedent have a will, how will the distribution go, etc. If the petition is approved, the personal representative can make distributions to the beneficiaries.

In light of the foregoing, people often ask "how long does probate take?" The common range is for probate to take 9-15 months to complete in most counties. From personal experience, the probates I've handled have taken between 7-12 months. The process can be longer if the matter is contested, e.g. there is a will contest.