Probate is the legal process used to determine the disposition of a person’s assets upon his or her death. in many states, the Probate Code is not overly complex, and there are streamlined processes for estates valued under $150,000. However, estates valued at more than $150,000 and not held in joint tenancy or as survivorship community property require the full probate process. The proceedings are held in the Superior Court for the decedent’s county and can take six months to a year to complete. Large estates can require a multiyear probate. During the probate period, heirs do not have access to the assets.
A will nominates a person to serve as executor. During probate, that person must file a petition with the court to be appointed to that position. Notices are then sent to the decedent’s heirs and relatives to advise them of the probate hearing.
The hearing is where any objections to the proposed executor’s petition are heard. The hearing is also used to resolve any disputes over the validity of the will. When an executor is appointed, either through granting of the petition or appointment of an alternate, an inventory of the estate’s assets and debts is compiled.
The executor locates creditors, pays bills and manages the estate’s assets until the distribution petition is filed. The distribution petition informs the court that the executor’s duties have been discharged, all creditors have been paid, and funds remain for distribution. When this petition is granted, remaining assets are distributed to heirs.
The maximum statutory fees that may be paid to attorneys and executors are set forth in Probate Code. In most cases, the fees are capped at four percent of the first $100,000 of the estate, three percent of the next $100,000 and two percent of the next $800,000. Fees are capped at one percent of estates assets between $1M and $9M and one-half of one percent of estate assets between $9M and $25M. The court determines the compensation rate for estate assets greater than $25M. Outstanding debts are not considered in these calculations. For example, an estate valued at $2,000,000 with $1,500,000 in mortgage debt is still deemed to be a $2,000,000 estate for calculation of probate fees.
With estates valued at more than $150,000, it may be advantageous to avoid probate by creating a living trust. A good estate planning attorney can point out the potential benefits of this strategy. Our business attorneys specialize in business matters, but are also well-versed on the probate code to help clients address their estate planning needs.