Probate is the process by which your local legal authority processes and administrates the management of a person’s belonging after death. Ownership must transfer to the living, whether personal effects or investments, properties, assets, and other items. Read on for an in-depth analysis of the cost of probate in California.
However, while we can use legal instructions such as wills as our last guide on distributing our own estate among our loved ones, the probate process exists to legitimize these instructions and determine whether they are the true last and final set of instructions a person left behind.
Probate processes also provide the legal framework and setting for family members to dispute the contents of a will or to question the legitimacy of a will document.
For most people, the probate process is a formality. However, even as a formality, it can cost money. On top of administration fees and assorted costs, probate usually requires the help of a legal representative or professional counsel. As an estate grows, its probate process becomes more complicated.
Certain types of assets can massively inflate the complexity and cost of probate. For example, owning a property outside of the state in which you reside can trigger the need for an ancillary probate or a secondary probate process. Foreign assets are even more complicated.
How Does Probate Work?
There are multiple steps to probate in California. In detail, the checklist for probate numbers in dozens of different steps, from managing final tax obligations to arranging for professional appraisers, notifying beneficiaries and creditors, cooperating with the courts, and much more. Thankfully, the gist of the process itself can be summarized in just a few steps:
- Death: Probate is only possible through a formal petition requiring a person’s death certificate.
- Petition: This will tell the courts to set a date for the probate process to begin.
- Selection: A person must be named executor near the beginning of probate. While a court oversees the process, the legwork must be done by an individual granted certain powers over the estate. This individual tends to be a family member, a close friend, or a trusted professional.
- Notification: Public notice is given out, beneficiaries are called, and certain creditors are given notice. Once the public notice of a probate process is out, creditors have limited time to file a claim against the decedent’s estate.
- Valuation: The value of the estate and its individual items must be determined as per the date of death.
- Balance: Throughout probate, debts are paid, final arrangements are made, tax obligations are fulfilled, tax liabilities are covered, and those entitled to a share of the estate are made whole.
- Distribution: Once everything else is said and done and the will has been completely legitimized, the heirs can claim what they were slated to inherit.
- End: At this point, the probate process has concluded.
What Is the Cost of Probate in California?
The exact dollar amount you can expect to pay for any given probate process differs from state to state and probate to probate. In California, the factors that determine your probate expenses include:
- The types of assets in your estate.
- The county in which you reside (costs can differ per county).
- The total size and value of your estate.
- Other elements of estate complexity and;
- The quality of your estate plan.
The probate process itself commands a set of different fees and costs. These are:
- Filing fees
- Court fees
- Attorney’s fees
- Executor fees (these are a set amount of compensation based on the size of the estate and may be waived)
- Other professional fees (appraisers for jewelry and other unique items, real estate appraisers, accountants, land surveyors, and so on)
- Probate bond
- And more.
It is practically impossible to name an exact figure – but an experienced attorney can give you a closer estimate upon examining your estate and your estate plan to give you an idea of what to expect. In general, the total cost of probate should remain a fraction of your estate’s value – but if that fraction is 10 percent of a $12 million estate, that amounts to a seriously hefty legal bill for your death.
In addition to money, probate costs time and lots of it. The larger an estate, the longer the probate process. Certain circumstances – such as large amounts of debt – can drag out probate.
Even under the smoothest conditions, do not expect a probate process to take anything less than a few months, if not close to a year to conclude. Thankfully, you have a few different options to minimize or even circumvent the probate process in California.
What About Expedited Probate?
In California, smaller estates can opt for an affidavit for an expedited probate process. This is only possible before a formal petition is made, so it’s important to be aware of this option early on in your estate planning process.
A small estate probate process is effectively an expedited probate process that allows for a much quicker, much less rigorous, and consequently much less expensive probate. The catch is that an estate must value a total of roughly $150,000 or less without certain exemptions to qualify for a small estate affidavit. On the bright side, you can reduce the size of your estate before death in a few different ways:
- Give lots and lots of gifts: There is an annual limit to how many gifts you can make before it begins to eat into your lifetime estate tax exemption and ultimately cost you gift taxes. If you stay under that annual limit and continue to give gifts to your loved ones throughout the year, you can slowly give away a significant portion of your estate before death.
- Fund items into a trust: Trusts exist as separate entities and can be written to completely separate themselves from their grantors. This allows you to hold items outside of the estate and outside of probate.
- Name beneficiaries: In California, some accounts, vehicles, and even properties can be automatically transferred upon death via a special clause and a named beneficiary. This beneficiary designation bypasses probate.
Should You Consider an Estate Plan?
Some of the strategies listed above are made possible by careful and case-specific estate planning. Estate rules can change on a whim, especially regarding after-death taxation.
Being prepared is important. Talk to a legal professional today about implementing your very own estate plan.
