Probate Questions
Why does an estate have to go through probate?
If I die without a will, won’t the State of California take everything?
I don’t own a house and have only a few thousand dollars in the bank. Do I need a will?
Probate is one method for the orderly winding up of a deceased persons affairs. It is supervised by the court and ensures that the deceased person’s taxes and creditors are paid and that his or her estate is distributed as he or she wished.
Why does an estate have to go through probate?
The decedent probably left a will, specifying who is to receive his or her property on his or her death. However, the will doesn’t operate automatically. We usually need the help of the court to carry out its terms.
Let’s take the following example: Mary Jones died last week, leaving two adult daughters. Her will left everything equally to the two daughters. At her death, Mary had a bank account containing $50,000.00, a house worth $500,000.00 and 100 shares of XYZ Corporation stock worth $5,000.00. She also had a credit card with a balance of $1,000.00 and substantial medical and hospital bills from her last illness.
Mary’s two daughters go to Mary’s bank, show the teller the will and try to close out the bank account. The bank teller needs to know the following: 1) Are these really Mary’s daughters? 2) Is this really Mary’s last will (maybe there was a later will, omitting one of the daughters)? 3) Is this really Mary’s will at all? Maybe it is a forgery. Maybe Mary was senile when she signed it and didn’t know what she was signing. 4) Have all of Mary’s bills and taxes been paid? 5) Is there someone else (such as relatives of Mary’s deceased husband) who may have a claim on this money?
Before this bank account can be closed, the bank will require proof that someone has court authority to withdraw the money. The Superior Court, through the probate process, will ensure that the above questions are answered satisfactorily.
Next, Mary’s daughters try to sell Mary’s house. However, the last deed to the house on record with the County Recorder’s Office lists Mary Jones as the owner. In order to change title to the property, Mary Jones must sign a new deed, transferring title to the house to the new buyers. Unfortunately, Mary Jones is not in a condition to sign a deed. The buyer will not accept the signatures of Mary’s daughters, because he has the same questions the bank had. Do they have the legal right to sign a deed? Are they really Mary’s daughters? Did Mary make a later will leaving everything to charity?
After Mary’s death, only Mary’s court-appointed representative (her executor or administrator) has the legal authority to sign a deed transferring title to the house.
The same questions are asked once again when Mary’s daughters try to transfer the XYZ stock into their names.
Mary’s creditors (the credit card company, the doctors and the hospital) also wish to be paid, and they expect that they will be paid by Mary’s estate. The probate process will ensure that this happens. Further, if Mary’s daughters do somehow gain control of Mary’s assets without going through probate and without paying the creditors, the creditors may later sue the daughters for the amount of their bills. Therefore, the probate process actually protects the daughters by making sure that when they receive their portion of the estate, it is free and clear and none of Mary’s creditors may come after her daughters.
Most people have heard horror stories about probate cases that dragged on for years. In extremely rare cases, this can happen. However, the vast majority of all probates are concluded in less than one year, and most estates close within seven to eight months.
The biggest single reason why probate takes so long is that the law requires a four-month waiting period after the executor is appointed for creditors to learn of the death and submit their claims to the estate for payment. While this may seem like a long time, remember that the beneficiaries or heirs of the estate are protected from the decedent’s creditors if they follow the proper probate procedures.
Some reasons why an estate may not close at the earliest possible time include failure to sell real property (in a slow real estate market, for instance); a challenge to the will by a person who wants a larger share or a person who has been omitted; a disputed creditor’s claim; inability to locate all of the heirs; a lawsuit to evict tenants from the decedent’s rental property; any other lawsuit that the decedent or the estate may be involved in, and income tax or estate tax problems.
Many people have attended seminars where they are told that the probate process is outrageously expensive and loots the assets of the decedent’s estate. Actually, probate usually costs less than the percentage you would pay to a real estate agent to sell a house of the same value as the estate.
The executor and the attorney he or she hires are entitled to receive the same fee, which is based on the size of the estate. This fee is calculated as follows: 4% of the first $100,000.00, 3% of the next $100,000.00, 2% of the estate over $200,000 and 1% of the estate over $1 million.
In Mary Jones’ case, her total estate is $555,000.00. The executor and the attorney would each receive the following:
4% of $100,000.00 4,000.00
3% of $100,000.00 3,000.00
2% of $355,000.00 7,100.00
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Total: $14,100.00
Attorney’s and executor’s fees, therefore, would total $28,200.00, which is five percent (5%) of the total estate. In practice, many times the executor will waive his or her fee.
In addition, court filing fees, appraisal fees and the cost to publish the notice of death in the newspaper usually total another $750.00 to $1,000.00.
All of these costs are paid for by the estate, and not by the beneficiaries. In fact, the attorney and the executor cannot receive their fee until the estate is closed.
If I die without a will, won’t the State of California take everything?
Almost never, although this is a very common myth.
The California laws of intestate (without a will) succession contain default provisions for where your estate will go if you die without a will. These provisions are based on what most people would want.
For instance, if you are married and all of your property is community property, it will all go to your surviving spouse. If you have separate property, it will be divided between your spouse and your children, if any.
If you are not married, your property will go equally to your children (and to the descendants of any child who died before you.) If you never had children, it will go to your parents, if they are still alive. If neither of your parents is alive, your property will go to the descendants (the “issue”) of your parents, i.e., your siblings and/or your nieces and nephews. If you were an only child, your property will go to the issue of your grandparents, i.e., your aunts and uncles and/or cousins, and so forth.
In the unlikely event that you were an only child and so were both of your parents, your property will go to your “next of kin,” provided any can be found. Only if no relatives at all can be found will your estate go (“escheat”) to the State of California. And even then, if relatives pop up later, they can file a claim with the state to receive their inheritance.
I don’t own a house and have only a few thousand dollars in the bank. Do I need a will?
Surprisingly, the answer is, “maybe not.
If you are satisfied with the default, or “intestate” provisions of California law (see “If I die without a will,” above), then you may not need a will, no matter the size of your estate. However, if you do not want your estate to go equally to your children, or to your siblings or nieces and nephews, or if you definitely want one person to be in charge of your estate (your “executor,”) then your wishes should be put in writing in the form of a will.
If your estate is valued at under $100,000.00 and contains no real property, it will usually not have to go through probate, whether or not you have a will. A notarized document, signed under penalty of perjury by all of the persons entitled to receive your estate will usually be sufficient. This document (Declaration Under Probate Code Sec. 13100 et seq.) can be prepared by any qualified probate attorney.
For a holographic will to be admitted into court as the Last Will and Testament of the decedent, it must meet three criteria:
It must be entirely in the decedent’s own handwriting. (No “fill in the blank” forms.)
It must be dated.
It must be signed.
If these three criteria are met, it does not have to be witnessed by two independent witnesses nor contain any specific language. But the lack of any of these three elements will cause it to be rejected by the court as a valid will.
However, being a valid will does not make it a good will. The testator can still leave out important information which may cause problems when it comes time to probate the will.
Nevertheless, I sometimes advise certain clients in certain situations to prepare a holographic will as a stop-gap measure until a more complete will can be prepared and signed with all of the proper formalities.
In short, there is no perfect substitute for a will drafted by an attorney, but there are emergency measures which you may take and which are better than no will at all.
The brief articles on this page are for informational purposes only. They are not, nor are they intended to be, legal advice. They do not, nor are they intended to, establish an attorney-client relationship. You should consult an attorney for individual advice regarding your specific situation.