After a person dies, their estate might need to pass through a court-supervised process known as probate. Although a formal probate isn’t required for all estates, it is for many of them. Whether an estate needs probate usually comes down to how the decedent’s assets were owned and the value of those assets.
During the probate process, the estate of the deceased is administered and distributed to the appropriate parties. When a person dies with a will, their estate will be distributed to beneficiaries according to the instructions in their will. When a person dies without a will (i.e., they die intestate), their estate will be distributed to their closest living heirs according to intestate succession laws.
The main purpose of probate is to legally transfer a deceased person’s assets either to the beneficiaries of the estate or to their heirs. However, prior to transferring the assets, the personal representative of the estate (i.e., the executor or administrator) must complete certain steps to administer the estate.
The steps of the probate process generally include:
- Authentication of the will: If a person dies with a will, it is the court’s responsibility to ensure their will is valid and that they were of sound mind when creating it.
- Appointment of a personal representative: During the initial probate proceeding, the court will formally appoint an executor or administrator to oversee the probate process. Although many people nominate an executor in their will, the court is not obligated to appoint the nominee to the role if evidence shows they are unfit to serve. An administrator, on the other hand, is selected based on the order of priority established by California Probate Code section 8461.
- Inventory of estate: Once appointed, the personal representative must marshal estate assets and create an inventory of them. The inventory must include the approximate value of each asset at the time of the deceased person’s death so the total value of the estate can be calculated.
- Payment of taxes and debts: Before any distributions can be made to beneficiaries or heirs, the executor or administrator must satisfy the tax obligations and valid debts of the deceased. Outstanding taxes take priority over outstanding debts, but once taxes have been paid, debts must be settled according to the order of priority established by Probate Code section 11420.
- Distribution of assets: Once all taxes have been paid and debts settled, the executor or administrator can begin the process of distributing the deceased person’s remaining assets to their intended beneficiaries or closest living heirs. Keep in mind that beneficiaries and heirs may not receive an inheritance from an estate if the cumulative value of the deceased person’s taxes and debts exceeded the cumulative value of the estate.
The probate process is launched when an interested party (usually the executor of the estate) files a Petition for Probate. This leads to the court setting a date for the initial probate proceeding, at which time probate is generally opened.
How long do you have to file for probate? While, technically, probate could be opened many years after a person’s death, it usually isn’t advisable to wait an extended period of time to file for probate.
That said, there are specific deadlines related to probate to be mindful of. They include:
- California Probate Code section 8001 states that if the nominated executor fails to petition the court for administration of an estate within 30 days of having knowledge of a person’s death and of having been named executor, they could be held as having waived their right to serve as executor.
- California Probate Code section 12200 states that the personal representative must either petition for an order for final distribution of the estate or make a report of status of administration within one year after the date of issuance of letters for an estate in which a federal estate tax return is not required or within 18 months after the date of issuance of letters for an estate in which a federal estate tax return is required.
Given all the steps that must be carried out after a person dies, it’s easy to understand why probate is required: it ensures the fair and proper distribution of a deceased person’s assets.
With that having been said, is probate always necessary? Do all estates go through probate?
Why Is Probate Required?
If you’re entitled to an inheritance from a deceased loved one’s estate, you should know that it most likely won’t be provided to you until the probate process concludes. This delay may cause you to regard probate as an unnecessary nuisance; however, probate is important for many reasons.
Validation of the Will
To initiate the probate process when a person has died with a will, an interested party (usually the executor nominated in the will) must file a Petition for Probate and lodge the person’s will with the court.
Probate plays a crucial role in determining whether the will lodged with the court is the true last will and testament of the deceased. It, likewise, validates the will. A will is only valid if its creator was of sound mind when making it and made it of their own free will.
If interested parties have cause to believe a deceased person’s will may be invalid, probate provides them with the opportunity to object to its admission into probate or to contest the document after it has already been admitted.
Payment of Outstanding Taxes
Though a common myth is that a person’s outstanding tax obligations die with them, the truth is that their estate is liable for paying them after their death.
Probate not only helps ensure the deceased person’s state and federal tax obligations are timely and accurately satisfied, but that they’re satisfied prior to their creditors and beneficiaries/heirs being paid.
Protection of Assets
As part of the role of an executor or administrator, it is required that an inventory of estate assets and their value at the time of the deceased person’s death be created. This aspect of the probate process is extremely important because it ensures all a deceased person’s assets are properly accounted for.
Without the inventory stage of the probate process, there would be a lack of transparency surrounding the nature and value of estate assets, creating confusion for both the personal representative and the beneficiaries/heirs around what each beneficiary/heir is entitled to from the estate.
Probate can also be useful in the preservation of assets. Say the executor is presiding over the estate of a deceased person who owned several rental properties. During the inventory stage of probate, the personal representative will be expected to track down each of these properties and take steps to preserve its value. For example, repairs may need to be made on a property, or rental payments collected from its tenants.
By conferring the personal representative with certain powers, probate can enable them to maintain, or possibly even increase, the value of an estate.
Protection of Creditors
After a person dies, their debts will remain active for a period of time. As such, creditors have the right to seek repayment of debts, so long as they’re valid, from the deceased person’s estate during probate using the creditor claim process.
This process places a strict four-month time limit on creditor claims, meaning that if creditors fail to enter their claim with the estate within four months of the appointment of an executor or administrator, their claim may be time-barred.
According to California Probate Code section 9051, the personal representative must provide reasonably ascertainable creditors notice of administration within the later of either four months after the date letters are first issued or 30 days after the personal representative first has knowledge of the creditor.
In addition, Probate Code sections 8120 -8125 require the personal representative to publish a notice of hearing for administration of the estate in a local newspaper on at least three separate occasions prior to the initial probate proceeding according to the specific rules and procedures described in the statute.
When a creditor isn’t timely notified, the deadline for entering a creditor claim with the estate might be extended. By imposing strict rules around notices, and bending the rules for creditors who weren’t timely notified, probate provides a structured approach for creditors to pursue repayment of debts. This process also protects beneficiaries of an estate by ensuring that creditors can’t come after them for the decedent’s death years later.
As we’ve discussed, creditors must be paid before beneficiaries/heirs according to the order of priority set up by Probate Code section 11420. Probate can help ensure this order of priority is followed.
Protection of Beneficiaries/Heirs
A beneficiary has a right to receive the inheritance the deceased left them in their will. Similarly, an heir has a right to receive the inheritance they’re entitled to under intestate succession laws. The only instance in which a beneficiary or heir may not receive their full inheritance is if the value of the estate’s debts exceeds the value of the estate, since debts must be paid before beneficiaries/heirs.
Probate can help protect beneficiaries and heirs by ensuring distributions are made according to the terms of the deceased person’s will or intestate succession laws, respectively. If the personal representative fails to make distributions in this manner, the chances they’ll be found out are higher during probate than during trust administration, since the former process requires court oversight, and the latter usually doesn’t.
Beneficiaries/heirs also have other rights during the probate process that can help protect them. For example, they are permitted to contest the will if they believe it to be invalid and have the evidence needed to contest a will. They also are permitted to bring an executor misconduct claim if they believe the personal representative might have breached their fiduciary duties.
Legal Transfers of Assets
While money generally can be transferred from an estate to its intended recipient in one easy step, the same can’t be said for other types of assets. Take assets like real properties, vehicles and bank accounts. These are complex assets that people hold title to and cannot be transferred from one owner to another without a formal process.
Probate helps facilitate the legal transfer of title from a deceased person’s estate to the appropriate interested parties, whether they be creditors, beneficiaries or heirs. It usually is not possible to establish new ownership of complex assets in an estate without probate.
Real properties, specifically, are often subject to ownership disputes. When such disputes arise, probate can help resolve them so the property in question can be transferred or sold.
Fair Resolution of Disputes
Many disputes can arise over the course of the probate process. Perhaps beneficiaries are challenging the will because they believe undue influence was involved in its creation. Perhaps the executor is not communicating with beneficiaries, leading the beneficiaries to seek the executor’s removal. Perhaps the deceased person’s trust has filed a Heggstad petition seeking the transfer of certain estate assets to the trust, as there is evidence to suggest that was the deceased person’s intention.
Probate establishes the legal framework for interested parties to resolve any disputes surrounding an estate in court. With the oversight of the probate court, disputes are likely to be handled in a fair and efficient manner.
When Does an Estate Go to Probate?
In California, whether an estate goes to probate generally is determined by the cumulative value of the estate and the ownership of its assets. In most instances, when a deceased person leaves behind assets that are not automatically transferred to beneficiaries through other means, their estate must pass through probate.
Explore the following sections to learn about the circumstances that make probate necessary for an estate.
Assets Were Owned by the Deceased
In California, an estate comprises assets that were owned by the deceased person and titled in their name at the time of their death. In other words, an asset held by the deceased person’s trust would not be considered a part of the deceased person’s probate-able estate, since the asset is titled in the name of the trustee of their trust.
Other assets that would not be considered a part of the deceased person’s probate-able estate include assets being transferred via title. A real property with a transfer-on-death deed, for example, would allow its owner to maintain full ownership of the property while alive, but would automatically transfer to the beneficiary on the deed upon the property owner’s death without passing through probate. Likewise, assets held as joint tenants or as community property with a right of survivorship would also generally transfer via title instead of probate to the surviving co-owner(s) or spouse, respectively.
Finally, assets with payable-on-death (POD) or transfer-on-death (TOD) beneficiary designations, which might include bank accounts, retirement accounts, annuities, life insurance policies and vehicles, aren’t typically regarded as estate assets, since they automatically pay out or transfer to the designated beneficiary upon the asset owner’s death.
When the total value of a deceased person’s probate-able assets exceeds the small estate threshold, probate will be necessary for the estate in question.
High Estate Value
In California, when the cumulative value of an estate exceeds $184,500, a formal probate will be required. If the cumulative value of an estate is $184,500 or less, it’s possible the estate will qualify for a simplified probate procedure.
It is required for estates that exceed this small estate threshold to pass through probate, because the larger an estate is, the more likely it is that it will need protection for the creditors and beneficiaries/heirs. Complex estates tend to be subject to more fiduciary misconduct claims, will disputes and property disputes. The oversight provided by the court can help the process remain fair and efficient when such issues arise.
If you are uncertain whether a particular estate will need to go to probate, consulting with a probate attorney can help bring clarity.
No Will
When someone dies without a will, it means there are no instructions to guide the distribution of their assets. As a result, their assets will be distributed to their closest living heirs in accordance with California’s intestate succession statutes, which can be found in Probate Code sections 6400- 6455.
Although a person dying intestate doesn’t automatically subject their estate to the probate process, it does increase the likelihood of that occurring, particularly if there is confusion around their assets or which heirs are to inherit them.
That said, if the value of a deceased person’s intestate estate surpasses California’s small estate threshold of $184,500, a formal probate will be required.
Transfers of Real Property
Although probate may not be required to transfer real property when the cumulative value of an estate is $184,500 or less, it is required for the majority of transfers of real property, since real property is a significant asset that requires title to be formally transferred into the name(s) of the new owner(s) to confer ownership.
A formal probate can help establish which beneficiaries/heirs are entitled to a real property, thereby reducing the possibility of questions arising in the future surrounding its ownership. Without a clear legal title, it could be difficult for the purported owners of a real property to sell, mortgage or transfer the property to the next generation.
Probating a real property can also eliminate the likelihood of anyone improperly claiming ownership of the property. For example, a relative of the deceased could hypothetically move into the deceased person’s home without being on title; however, this would be unlawful and potentially unfair to the beneficiaries/heirs who are legally entitled to inherit the home. Court oversight of the transfer process can help ensure that if any issues like this arise, they will be effectively handled.
In the same vein, court oversight can help ensure creditors are treated fairly. Because all valid debts must be satisfied before any assets are distributed to beneficiaries or heirs, and the personal representative may need to sell a real property in order to satisfy the deceased person’s debts, probate can assist the personal representative with deciding how to properly dispose of a property.
Outstanding Taxes and Debts
As we’ve touched on already, a crucial element of the probate process is ensuring the deceased person’s outstanding tax obligations and valid debts are paid. The personal representative generally is required to fulfill these liabilities prior to making any distributions to beneficiaries or heirs — even if this means beneficiaries or heirs will receive no inheritance from an estate.
When an estate has considerable liabilities, probate might be required to ensure taxes and creditors are paid in a structured and fair manner. Probate provides creditors with a four-month window to enter their creditor claims with the estate. Although the estate is permitted to reject a creditor claim it believes to be invalid, probate makes sure the creditor claim process is handled with transparency and according to established legal procedures.
The court’s supervision during the probate process can help guarantee valid debts are paid in the specific legal order listed in Probate Code section 11420. This statute aims to curb confusion and disputes surrounding which creditors should be paid first.
Will Contests
If an interested party is contesting a will, probate will be required for a number of reasons.
First, there would be no formal legal process to resolve a petition to invalidate a will without probate, as it offers a forum for interested parties to present their cases and for the court to examine the evidence and make a determination.
Probate also usually helps to ensure that all the parties with a financial stake in the will contest are properly notified about the contest so they can participate in it if they so wish, thereby helping the rights of interested parties to remain protected.
When Is Probate Not Necessary?
Although probate has its benefits, there are arguably just as many benefits to bypassing it when it’s genuinely not required, such as significant time and cost savings. Therefore, it’s worth reviewing the sections below to explore the conditions under which a formal probate can potentially be avoided, making it possible for beneficiaries and heirs to receive their inheritances quicker.
Small Estates
As previously discussed, a small estate, or an estate cumulatively valued at $184,500 or less, typically doesn’t need to pass through a formal probate. Rather, the estate could be settled with a simplified probate procedure that is less expensive, time-consuming and involved.
Beneficiary Designations
When an asset designates a POD beneficiary or TOD beneficiary, it means the asset can be paid or transferred directly to the beneficiary following the asset owner’s death without having to pass through probate.
Common assets with POD or TOD beneficiary designations include bank accounts, retirement accounts, annuities, life insurance policies and vehicles.
Although a beneficiary designation can be contested, leading to the asset at issue being subjected to probate, it is a rare occurrence. This is because recovering an asset after it’s already been paid out or transferred can be an uphill battle.
Trusts
When the majority of a deceased person’s assets are in a trust, probate is generally unnecessary. Unlike estates, trusts are privately administered.
Many people place their assets in trust for the purpose of avoiding probate. By avoiding probate, administration expenses might be less, and beneficiaries might receive their inheritances faster.
There are only a handful of instances in which a trust may need to pass through probate. For example, if a trust was not properly funded before the trust creator’s death or if there are contentious disputes surrounding the trust, it may be necessary for a trust to be probated.
Joint Ownership / Right of Survivorship
When the way of holding title to property is as joint tenants or community property with a right of survivorship, it means the surviving co-owner or surviving spouse, respectively, can assume full ownership of the property upon the other co-owner’s or spouse’s death without the property passing through probate.
Only if there is a dispute surrounding title might it be required for a property held as joint tenants or community property with a right of survivorship to go through the probate process.
Does a Will Avoid Probate?
Most of the time, a will does not avoid probate. However, if a will is well-drafted and valid, it could streamline the probate process and minimize costs, since confusion or disputes surrounding the document would be less likely to arise.
Do All Wills Have to Go Through Probate?
Not all wills have to go through probate. If a will is disposing of assets in a deceased person’s estate that has a cumulative value of $184,500 or less, for example, it generally wouldn’t be necessary to submit the will to probate unless there is a dispute over the will.
It also may not be necessary for a will to go through probate if the majority of assets mentioned in the will have beneficiary designations, since beneficiary designations usually allow assets to be paid or transferred directly to the beneficiary without the asset passing through probate.
In summary, while not all wills have to go through a formal probate, a large majority of them do. It is safe to assume that if someone died with a will leaving behind an estate worth more than $184,500, their will won’t be able to bypass a probate.
Does a Pour-Over Will Avoid Probate?
A pour-over will generally does not avoid probate, but it is possible that it could qualify for a simplified probate procedure.
A pour-over will provides that any assets that hadn’t been transferred into a will creator’s trust prior to their death be transferred to the trustee of their trust following the completion of probate. Pour-over wills can act as a sort of Plan B in the event the will creator intended to fund their trust with certain assets but failed to formally make the transfers before their death.
Why Does a Will Have to Be Probated?
A will has to be probated to confirm both its validity and that it is the true last will and testament of the deceased.
In order for a will to be valid, its creator would have needed to make the will of their own free will and at a time when they were of sound mind. It also would have been necessary for the will creator to have followed the proper legal procedures to do so.
What Are Alternatives to Probate?
Because of the time investment and high costs associated with probate, many people seek to avoid the process entirely. This can be done preemptively through careful estate planning or it can be done retroactively through the use of simplified probate procedures.
In the following sections, we’ll discuss alternatives to probate that interested parties may be able to utilize in place of a formal probate to settle an estate. However, remember that some of these alternatives to probate are only available to estates that are cumulatively worth $184,500 or less.
To determine how much an estate is worth, all probate-able assets must be valued. Probate-able assets are any assets that are not being held by the deceased person’s trust, being transferred via beneficiary designations, or being transferred by default via joint ownership or rights of survivorship.
If you are interested in using one or more of the shortcut procedures mentioned below but are unsure whether the estate you are dealing with will be eligible to use them, a probate attorney can help you decide the proper course of action.
Small Estate Affidavits
Small estates (i.e., estates that have a cumulative value of $184,500 or less) generally can utilize a legal document known as a small estate affidavit to distribute the assets in an estate to intended beneficiaries or direct heirs.
Petitions to Determine Succession to Real Property
A petition to determine succession to real property can be used by anyone to transfer a deceased person’s interest in a real estate asset to their intended beneficiaries or direct heirs without the property having to pass through a formal probate.
Similar to other alternatives to probate, a petition to determine succession to real property can only be used if the cumulative value of an estate is $184,500 or less. In other words, if a real property is worth $184,500, this petition could not be used to transfer the property to beneficiaries or heirs without a formal probate unless there were no other assets in the probate-able estate.
Spousal Property Petitions
A spousal property petition can be used by a surviving spouse or registered domestic partner, their personal representative or their conservator to confirm and convey ownership of property from a deceased spouse to the surviving spouse without the property having to be formally probated.
Similar to small estate affidavits, spousal property petitions allow any questions around title or ownership of assets to be resolved in as little as one probate hearing.
Affidavits re Real Property of Small Value
If the cumulative value of all a deceased person’s real property located in California does not exceed $55,425, it may be possible to file an affidavit to transfer the real property to its new owner(s) without the property having to pass through a formal probate, according to California Probate Code sections 13200-13210. The value of the real property must be confirmed by an inventory and appraisal by a probate referee.
Keep in mind that this affidavit cannot be filed unless more than six months have passed since the property owner’s death and all last illness expenses, funeral expenses and unsecured debts of the deceased have been paid. If any proceedings around the administration of the estate are pending, the written consent of the personal representative must be obtained to use this affidavit.
By facilitating the fast and streamlined transfer of real property, this affidavit can be particularly useful in situations where the deceased held a fractional interest in real property (e.g., as a tenant in common).
Still confused about when probate is required? We can guide you.
Even though avoiding probate is not always possible, it is a good idea to confirm it’s really necessary before filing for it. When probate can be avoided, it can save you major hassles, time and money.
As a law firm that solely dedicates its practice to probate litigation and administration, our attorneys are highly experienced in all matters probate and can assist you with deciding whether probate is required in your particular situation.
Whether you open a formal probate or utilize a simplified probate procedure, the process can be complex. Learn how our attorneys can help make the process simpler for you by reaching out to our firm. Call us today to see if you qualify for a free consultation.
