What is Probate and Why Avoid It?


what-is-probate

About five years ago a client asked me to help her probate her mother’s Will. At the time, I had been a practicing lawyer and litigator for three years. No problem, I thought to myself. Boy was I wrong. Even as a practicing attorney I found myself wondering, what is probate? If you are wondering the same thing, this post is for you. I am going to share what I learned about the probate process during my first experience and all subsequent ones after that.

Probate is a court process to settle an estate after someone dies. There are two types of probates. The first is interstate probate. For example, if someone dies without a Will, then they are “intestate” and a court has to decide what happens to their property. The second type is testate probate. “Testate” probate is used when someone dies with a Will. In both cases, a court needs to make sure that all taxes are paid, all creditors are paid, and all potential heirs have an opportunity to come forward.  

What Probate Means

We get the word “probate” from the Latin word, probare, which means to test or prove. The English word “probe” is also derived from its Latin sister, probare. So, probate means to test or prove an estate.

When you die with a Will, the court will prove the Will by determining its validity and accepting any challenges from the heirs.

When you die without a Will, the court will prove that you died without a Will and allows any heirs to come forward to provide the court with a Will.

Probate begins by filing a petition for probate. The petition is a document asking the court to officially open probate and appoint you as the administrator.

How Long Does Probate Take?

After you file your petition, it usually takes two months before the court can make any decisions regarding your petition. During this time, heirs or other persons can object to the petition.

Typical objections include the Will is not valid, there is another more recent Will, someone else should be appointed administrator, and an heir should be added or removed from the estate.

After the court approves your petition, there is a 4-6 month waiting period for creditors to make claims. If a creditor makes a claim, the court needs time to decide whether to pay the claim, how the claim will be paid, and who will pay it.

Next, you file an accounting with the court after you pay all claims (or if no one files a claim).

The accounting can be tricky, time-consuming, and taxing. It typically takes about a month to collect all the receipts and balance the accounting. Once you complete the accounting, the court needs time to review it and approve it. This process can take another two to three months (especially if there is a problem).

After the court approves the accounting, you can file a petition for final distribution. Although, it is frequently a good idea to file the accounting and petition for final distribution together.

The petition for final distribution asks the court to approve the plan for distribution. If there is a Will, the plan for distribution is stated in the Will. If there is no Will, then the court follows the State’s plan of distribution.

You can see the State’s plan of distribution in the infographic below.

instesttae-succession-chart

Once you distribute the estate property to the proper persons, you need to file receipts proving that you made the distributions and a petition for discharge.

Depending on the complexity of the estate, this process can take several months.

At a minimum, probate takes about a year. But, it often takes a lot longer because of objections, creditors, or other issues.

How Much Does Probate Cost?

In California, the probate code mandates the fee amount. This means that if you hire an attorney, he or she is entitled to the statutory fee. These fees are a percentage of the gross value of the estate. The administrator of the estate is also entitled to the statutory fee.

For example, the average home in California is nearly $500,000. Thus, you can expect (on average) the statutory fees to be at least $22,000. The court may award greater fees if the attorney or administrator did extraordinary work.

Here is an infographic showing the average cost of probate compared to the average cost of a living trust.

Average Cost of Probate

How Can You Avoid It?

The only way to avoid probate is to do proper estate planning before you die. For example, a living trust avoids probate. Additionally, certain types of estates and assets do not need to go through probate.

The types of estates or assets that do not need to go through a formal probate are:

  • Estates Under $150,000.
  • Real Property under $50,000.
  • Vehicles and Boats Registered in California.
  • Property Owned in Joint Tenancy.
  • Real Property Identified on a Transfer of Death Deed.
  • Joint Bank Accounts.
  • Pay on Death Accounts.

Why You Should Avoid It

You may be wondering, what’s the big deal? I can go through a court process, why should I avoid probate? If this is you, read on.

There are three reasons why you should avoid probate.

First, probate takes a long time. Until the court allows you to have access to the estate property, you cannot pay bills or get access to funds. Thus, waiting for the court often causes significant hardship. For instance, one of my most frustrating cases involved a grandparent paying for his granddaughter’s college tuition. When he died, the granddaughter could not get access to the bank account in time to pay her tuition. She had to temporarily drop out of school until the court allowed her to have access to the funds a year-and-a-half later.

By contrast, a living trust is seamless. Once one trustee dies, the other takes over. Moreover, if you properly fund the trust, the trustee immediately pays the bills and other expenses.

Second, as I said above, probate is expensive. Most estates have a home, a few bank accounts, and personal property. Unless you have enough cash in your estate to pay for the probate fees, you have to sell estate property. This often causes problems when family members do not want to sell the property. For example, if the children want to keep their childhood home, but there is not enough cash in the estate to pay the fees, the children may be forced to sell.

By contrast, a living trust (and complete estate plan) may cost a few thousand dollars upfront but saves a ton after death.

Third, it’s complicated. You need to file a lot of documents in very specific ways. Additionally, there are a lot of notices that must be filed at particular intervals or else you could face significant delays.

If you would like a more detailed description of the entire probate process, check out my other article called: “How to Probate a Will in 11 Detailed Steps.”

Moreover, even though a trust can be equally complicated, dealing with errors in administering a trust is easier than dealing with errors during the probate process. For instance, the probate code, a rigid set of rules, governs the entire probate process. Whereas a trust can be handled informally and problems can be resolved relatively quickly.

Conclusion

You learned that probate is the long, expensive, complicated process of a court determining what happens to property after someone dies. You also learned how the process unfolds, and some ways to avoid probate. If you are currently stuck in probate, hire a probate attorney.

Here is another article to learn more about probate: “Intestate Succession: The Do-Nothing Plan.”

This post and others referenced on this website are intended to help you. They are for informational purposes only. You should NOT rely exclusively on the information contained in this post. Be sure to read more about our DISCLAIMERS.

James Long, JD

James earned his Juris Doctorate in 2010 and was later appointed to serve as an Expert for the Vatican at the United Nations. James is the former Managing Editor of the University of St. Thomas Journal of Law and Public Policy, and an Associate Editor of the St. Thomas Law Journal. James is currently a business lawyer, litigator, and estate planner with nine years' experience helping families and businesses succeed.

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