Without a proper estate plan, California has a process to dispose of your assets called PROBATE.
Probate is the legal process through which the court makes sure that when you die, your debts are paid and your property is distributed according to your WILL.
If there is no valid will, or if a will contest has resulted in the will getting thrown out, the court will look to California’s INTESTATE SUCCESSION laws to determine who the heirs will be and how the property will be distributed among them:
- Surviving spouse, if no surviving spouse then;
- Eventually if no heirs are found, the property “escheats” to the State and thereby becomes the property of the Government.
MYTH: I DO NOT GO THROUGH PROBATE IF THERE IS A WILL
If your gross (not net) estate is over $150,000, it is subject to PROBATE.
In California, Probate Legal Fees are a percentage of the Gross Probate Estate. (Excluded from Probate are assets held in a Living Trust, or by Joint Tenancy, Life Insurance payable to a beneficiary other than the estate, Retirement Plans, and any other “POD” or pay on death assets).
FEES PAID TO THE COURT:
There is a $435 fee payable to the Court for each petition you have to file. In simple probate cases you only have to file two petitions, which include the initial “Petition to Probate” the estate and a Petition for Final Distribution. For more complex cases, you may have to file additional petitions. In addition, you must file a Notice of Probate in a newspaper. You are required to use only certain newspapers and their charges will vary. Expect the notice to cost anywhere from $100 to $450.
FEES PAID TO THE ATTORNEY:
An attorney’s fee — called a “statutory” fee — is based on the fair market value of the assets in the estate. The fee doesn’t take liabilities into account. The probate code establishes a sliding scale:
4% of the first $100,000
3% of the next $100,000
2% of the next $800,000
1% on the next $9,000,000
0.5% on the next $15,000,000
A reasonable fee thereafter
The Gross Probate Estate is the total value of the estate BEFORE reduction for debts. For example, a $1,000,000 gross value estate is worth $23,000 in fees, even if the net value of the estate is worth a lot less after reduction for mortgages and other debts. If there are complications, extra fees are allowed with Court approval, which is routinely granted.
Probate may take years to complete, and the average time is one to two years. During this period, your family will experience loss of privacy and control and pay expensive administration costs (4-10% of the gross estate). Everything is public and requires court approval.