9 Things That May Surprise You About Probate

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.

While the Probate process is fairly straightforward, it can quickly become complex when there are multiple beneficiaries and complicated assets. We assist our clients through each step of the process.

Probate is a growing service for us

We are now featuring Probate at one fixed price: $4,500. No surprises. Contact California Document Preparers at one of our three Bay Area offices to schedule an appointment or find out how we work with our clients.

Have You Been Named Probate Executor? Brush Up Your Bookkeeping Skills

Elise sat in her kitchen staring at a huge, meaningless pile of bills, bank statements, outstanding invoices and cancelled checks. She had always been close to her dad, but right now she was furious at him for dying and making her the Executor of his estate in his Will. Elise was a musician with an MFA, not an accountant. She was nearly 50 and had never so much as balanced her own checkbook. She was not irresponsible, just not equipped to deal with this kind of challenge.

She finally called her friend Joe, a bookkeeper. Joe arrived, looked at the sea of bills and quickly agreed that her dad’s records were a mess. He’d never recorded checks, and some of the invoices were three years old.

Joe helped Elise create a plan that started with getting methodical and organized

• Create a pile of all the bills and invoices.
• Look for receipts, cancelled checks or other verification that a bill has been paid, such as bank statements, and create another pile.
• Keep a separate pile for anything that’s going to affect a credit balance–checks that might have been received or automatic deposits that were made to an account.
• Create a spreadsheet. List all of the bills found; match them with cancelled checks and receipts.
• If you can’t find something, first check bank statements. If nothing is there, call the company that sent the invoice and ask if the bill has been paid.
• If it has been paid, request a receipt. If it hasn’t, create a separate spreadsheet category for unpaid bills or outstanding debt and note the amount.

Key responsibility of the Executor: Accounting for assets and liabilities

To those who are not used to keeping careful financial records, this may seem like a lot of work, and it is. But until the assets and liabilities have been accounted for, Probate cannot move forward. It is important to document every step taken to verify liabilities and assets. It is also important to document the liquidation of assets to either pay bills or divide the estate among the heirs. This will include the cost of an appraiser who will estimate the value of any property that needs to be sold, then recording the sale.

• Invest in financial software. A spreadsheet is fine; Excel will do the math for you.
• Focus on the numbers. Check and recheck the numbers—they need to balance.
• Match every number to a source document. It is much easier to locate an error if every entry is matched to a source document–a receipt, account statement, correspondence, bills paid or pending, and photocopies of checks and deposit slips. Note the source on the spreadsheet, file the documents and keep on hand.
• Document everything. Keep comprehensive notes on all expenses and transactions made on behalf of the estate, including dates, purpose and the exact amount. Keep receipts.

Don’t take questions or challenges personally

If the estate closes and a mistake is later discovered, those who received disbursements may be required to reimburse the court to correct a deficiency. Discovering errors before an estate closes protects the heirs and the estate. Conducting an accounting of an estate during Probate is a technical process that requires attention to detail and accuracy. When done well, Probate proceeds smoothly.

Probate is a growing service for us

If your Probate is uncontested, you don’t need an attorney, and we can assist you—all for one flat fee of $4,500. Contact California Document Preparersat one of our three Bay Area offices today to schedule an appointment. Our dedicated team is helpful, compassionate and affordable.

Who Has the Title to Your Deed: You May Be Vulnerable to Probate

This case study is a cautionary tale, and unfortunately, we see this kind of situation all too often. It highlights the importance of what is called vesting, or the way in which title to a Deed is held. It seems like a small thing, but a Deed is the legal document that identifies the property owner. Without the title, it is impossible to buy or sell a home. And as our client discovered, she also couldn’t update her Living Trust.

Updating Claire’s trust to reflect the changes in her life

It began when our client, “Claire”, came in to our Walnut Creek office to update her Living Trust. She’d experienced some significant changes since she’d created her Trust more than ten years before. She’d divorced, added a grandchild, lost her daughter to breast cancer and her mother to heart disease, changed jobs so that she was making significantly more money, bought a very promising stock that was soaring, invested in a Tahoe timeshare and purchased a life insurance policy. These were precisely the kinds of life events that should alert people to the need to be updating their Trusts.

We began amending Claire’s Trust to reflect the many changes in her life, but ran into a problem when we got to Claire’s Walnut Creek home. We needed to move the home into the Trust, but it was partially owned by her mother, and mom had died in 2015. Unfortunately, the Deed didn’t state that the owner and her mother were “joint tenants”, which meant that full title didn’t automatically pass to Claire when mom died. The result: 50% of the property would now have to go through Probate to determine ownership.

Probate a growing practice area for us

At California Document Preparers, uncontested Probate is a growing practice area for us, and this is one of the situations we most frequently encounter.

As part of Probate, the Court appoints a personal representative, or administrator, to settle the estate, so we work closely with the administrator throughout the Probate process. Claire became the administrator for the Probate, responsible for the following:

• Placing a notice in the local newspaper and mailing notices to creditors. Probate is a public process.
• Collecting the Probate property of the decedent.
• Paying all debts, claims and taxes owed by the estate.
• Collecting al rights to income, dividends, etc. and settling disputes.
• Distributing or transferring the remaining property to the heirs.

Access to the decedent’s accounts

As an administrator, Claire can access all of the decedent’s records to understand the financial landscape. This may include valuing assets, taking physical custody of assets and selling assets, as necessary, to pay off debts or expenses. In this case, since Claire’s mother had already dealt with those financial assets by beneficiary designations, the only outstanding issue was the Deed to the home.

During Probate, the deceased’s estate becomes a separate tax entity, so Claire had to obtain a federal identification number. She was also responsible for filing the estate’s tax return and a final individual tax return.

Distribution of remaining assets

Once all taxes and debts have been satisfied, the Court distributes any remaining assets according to state law. In California, as in most states, the first priority is given to the deceased’s spouse, followed by the deceased’s children. In this case, the only asset in question is the 50% ownership of the home in which Claire is living. Claire was her mother’s only daughter, so mom’s interest in the house was distributed to Claire.

By vesting the Deed as joint tenants, they would have avoided Probate

If the Claire and her mother had been joint tenants on the Deed to their home, this scenario would have been dramatically simplified and they would have avoided Probate. When we prepare a Deed, we present all the options so clients can make informed decisions about how they wish to hold title—hopefully avoiding an unfortunate situation like this.

Do you need to transfer your Deed? Call California Document Preparers at one of our three Bay Area offices today to schedule an appointment. You can also jumpstart the process with our easy-to-use, secure online storefront–we’re still available by phone and email if you have questions. We’re helpful, compassionate and affordable.