John’s father died unexpectedly in 2012, and he never quite got around to creating a Will or documenting his assets and their locations. The result? Five years later, John, our client, is still trying to finish probating his father’s estate. It has required a monumental detective effort to identify his father’s assets and their locations. As John unraveled the puzzle, he discovered that his father’s assets spanned countries and continents—each requiring a separate Probate procedure.
When someone dies without a Living Trust that identifies how his/her estate will be distributed, the estate goes into the court-supervised process of Probate. It can seem daunting, but thankfully, it is rarely as complicated as John’s father’s estate. Probate is actually a very methodical process, and California Document Preparers assists our clients through every step of the process.
Here are 9 frequent questions and misperceptions about Probate that you may not know:
1. An estimated 50% of estates in the U.S. go through Probate
If you’re facing Probate, you’ve got lots of company. More than 50% of Americans do not create a Living Trust, and their families are left to deal with Probate at what is already a very difficult time of loss and mourning. The Probate process can be time consuming and expensive.
2. Not all assets are subject to Probate
Assets that have a named beneficiary, such as a life insurance policy, an IRA or a 401(k), assets held in joint tenancy, and those that are Payable or Transferable on Death are not subject to Probate.
3. Probate typically takes 9-12 months
Probate allocates a four-month waiting period for creditors to file outstanding claims. In Contra Costa County, for instance, the Probate process generally cannot be administered in fewer than nine months. The times can vary by county, and the complexity of the estate can have a significant impact. If the deceased has made large gifts/donations during his/her lifetime, is a beneficiary of a Trust, owned a business and/or a significant amount of real property—especially if it’s in another state or country, as is the case with John’s father—the process will take much longer.
4. There is a time limit for creditors to file claims
One of the primary responsibilities of the Administrator is to properly notify all creditors of the estate. Once properly noticed, creditors must issue their claims to the court within the creditor claim period, generally four months.
5. The estate’s personal representative manages the Probate process
A decedent names an Executor in a Will. When there is a Will and an Executor, the court likely will name that person the Administrator of the estate for the Probate process. If there is no Will, or the Executor is unable to act, the court appoints an Administrator. It’s important that this role is filled by someone who is able to deal with sometimes complex financial matters.
6. Property owned outside California is a separate Probate
If the decedent owned real property outside the home state, a separate Probate must be opened in that state, called Ancillary Probate.
7. The Administrator may collect fees
In addition to out-of-pocket expenses for managing and settling the estate, Administrators may earn fees for their services, typically from 2-4% of the estate’s value. Probate can be very time consuming, especially for complex estates.
8. The Administrator can be held liable
The Administrator can be held personally liable for improper management of the estate. The Administrator also can be removed if an action is brought by a beneficiary or other person that clearly demonstrates mismanagement.
9. Heirs must be notified about proposed actions
California law requires that heirs and beneficiaries be properly notified when the Administrator desires to take certain actions, such as sale of real property, occur. Failure to properly notice or handle issues regarding the estate may result in legal action from beneficiaries.