What is probate?
Probate is a court proceeding in which a Personal Representative marshals all of your assets, pays off all of your creditors, then distributes what is left to your heirs. When you have a Will, the Personal Representative is called an Executor. If you do not have a Will, the Personal Representative is called an Administrator.
If you have a Will, then the heirs will be those that you name in your Will. Disgruntled, disinherited heirs can choose to contest your Will during the probate proceeding. There are consequences to contesting a Will if your Will has what is known as a “No Contest Clause.” However, with the rise of elder financial abuse, the California Legislature has been increasing the exceptions to No Contest Clauses so families can fight Will changes made in favor of financial abusers. Under a No Contest Clause, if it applies, the person contesting your Will is completely disinherited from receiving any money at all (or is only left $1).
If you do not have a Will, then your heirs will be those specified above under the Laws of Intestate Succession.
Probate proceedings can last as long as 2 years or more; they rarely last less than a year. The length of the average probate proceeding is increasing due to budget cuts with the Courts; we are currently experiencing delays as long as 4 months or more in setting hearing dates! Each probate proceeding requires several hearings dates before it can close. With a probate, your heirs will have to wait until the end of the probate proceeding to receive their inheritance. However, the Probate Court will allow for preliminary distributions to your heirs in probates that are lasting for an unusually long period of time. And, the Probate Court can allow for a periodic “Family Allowance” for your dependents while the probate is pending.
Probate can also be expensive because both the Personal Representative and his attorney are entitled to what is called a “Statutory Fee.” This fee is set by law, cannot be reduced, and is based on a sliding-scale, percentage value of your estate as follows:
|Sliding Scale Percentage||Amount||Total|
|4% on the first $100,000||$ 4,000.00||$ 4,000.00|
|3% on the next $100,000||$3,000.00||$ 7,000.00|
|2% on the next $800,000||$ 16,000.00||$ 23,000.00|
|1% on the next $9 million||---||---|
|½ % on the next $15 million||---||---|
|Above $25 million||a reasonable amount to be determined by the court|
Remember, you have to double this fee times two – both the Personal Representative and her Attorney are entitled to this Statutory Fee. In addition, the Personal Representative and her Attorney can each seek “Extraordinary Fees” for certain services classified as extraordinary, subject to the Probate Court’s approval. Extraordinary Fees are in addition to the Statutory Fees.
Because of the expense and delay of probate, many people opt for a Trust to distribute their assets upon death. With a Trust, no probate proceeding is necessary in order to transfer your assets to your heirs.
Have questions? call Wright Kim Douglas of Glendale California today at (626) 356-3900 for an appointment.