When a loved one dies, settling their estate usually includes probate. People often are not prepared for the legal process and costs, even if they had discussed it with their recently deceased loved one beforehand.
Probate is essentially the court-supervised process by which the decedent’s estate is distributed to heirs, beneficiaries, trusts and/or charities, and debts and taxes against the estate settled. If your loved one left a will or codicil, the estate is called testate; where there is no legal document or instrument, intestate.
The probate process
Probate administration begins when the executor or personal representative submits the will to probate. In California, when someone dies, the person in possession of the will must submit it within 30 days to the Court of the County in which the decedent resided at the time of his death.
Under the California Probate Code, the formal process of probate includes filing the petition to begin probate, notifying heirs and creditors, verifying the will, filing inventory of the estate, settling all claims against the estate, paying estate taxes, and distributing assets to beneficiaries before a final accounting to the court.
Not all estates go through this process, and depending on the size, many will have minimal or no administration. In California, recent legislation has raised the amount allowed for the transfer of property without probate through the filing of affidavit forms verifying the total estate of $166,250 or under, or real property of small value of $55,425 or less.
How to minimize probate
Much of estate planning involves learning how to minimize how much of the estate will go through probate. As California is a community property state, assets that couples hold in joint tenancy with rights to survivorship will automatically pass to the surviving spouse. POD designations on bank accounts or CODs, as well as TOD deeds and registration of stocks, bonds and vehicle registrations, will keep all of these assets out of probate.
More complex estate planning involves establishing a trust, either revocable or irrevocable. This fiduciary arrangement allows a third party to hold assets on behalf of one or more beneficiaries. Depending on how it is set up, funneling assets of the estate into a trust may avoid some probate, but it does not mean that the estate will not be taxed.
When making plans for the future, it is best to get informed advice on how to manage your estate not only as you make plans to provide for your loved ones after death, but also in finding the best way to work through probate administration.