| The Problems With Probate |
WHAT IS PROBATE?
"Probate" is the legal process administered by the Superior Court in which your assets are gathered, appraised and distributed. When you are alive, you have the legal power to transfer title to your property. When you die, that right dies with you. After your death, only the Probate Court can transfer the title of your assets to your heirs. In distributing your property, the Court will use the provisions of your Will as a guide. However, the Probate Court has the absolute power to disregard any of your will's provisions, or all of them. If you die without a Will or your existing Will is deemed invalid, your property will be distributed to your heirs as decided by the laws of the State. If no heirs can be found, it will be distributed to the State. Unless the total gross value of your estate is $100,000 or less and it does not contain real property with a gross value of $10,000 or more, and would therefore qualify for "Disposition of Estate Without Administration" under Section 13000 of the California Probate Code, upon your death there would be no way for your heirs to obtain the title to real property or other assets without going through the process of probate.
PROBLEMS OF PROBATE
PROBATE IS EXPENSIVE.
Costs of probate typically run from 8% to 10% of the gross estate. They can sometimes be less, they also can be significantly more. These fees must be paid before the probate file can be closed and the estate distributed to your heirs. Also, in each state that you hold real property, a separate probate case must be opened. When there is a probate case opened in another state, you must have a different lawyer for that case and pay all of the court costs and fees in that state as well. It is important to understand that probate fees are figured on the Gross value of your estate and are separate from federal estate taxes. For example, if you own a home worth $200,000 with $10,000 of equity, probate fees are based on the $200,000 gross value not the $10,000 of equity. The cost of probating that $200,000 asset would be approximately $11,000. If there were not other assets in the estate to pay the $11,000 in probate costs and fees, the Court would order the property to be sold to pay them. This can result in the forced sale of a family home or other properties at "fire sale" prices. It is often the small estate that suffers most from the probate process.
HOW MUCH ARE TYPICAL PROBATE FEES?
ESTATE VALUE APPROXIMATE PROBATE COST
$100,000 $5,950
$200,000 $11,080
$300,000 $14,350
$400,000 $19,050
$500,000 $23,650
$600,000 $26,000
PROBATE IS TIME CONSUMING
Even a simple probate can take between one and two years to complete. However, more complicated cases, particularly when there is property located in several states, can take three, four or more years to close and distribute assets. Some probate cases that were filed during the seventies and eighties remain open, and the estate property is still undistributed.
ALL PROBATE PROCEEDINGS, DOCUMENTS AND FILES ARE OPEN TO THE PUBLIC
All of the documents filed in a probate case are open to public inspection, including the will, the inventory and the appraised value of the property. Anyone can go down to the courthouse, request the file from the Court Clerk and look over, and even copy anything in the probate file of the deceased person's estate. The file will contain information concerning each asset, the debts, amounts of insurance, cash available, names and addresses of heirs and a great deal more about the deceased person's family and estate.
PROBATE CAUSES LOSS OF CONTROL OVER FAMILY PROPERTY
During the pendency of the Probate Case, the assets of the decedent are placed under the jurisdiction of the Probate Court and typically frozen, so an accurate inventory and appraisement can be completed. Without the court's approval, nothing from the estate can be distributed or sold. If your family needs living expenses, they must be requested through the court and may or may not be approved. Family members suddenly find themselves unable to exercise any ownership rights of "family property" such as selling property, withdrawing money from bank accounts, buying or selling stocks, and accessing safe deposit boxes without the approval of the Court. The legal system does not trust anyone, including your family. Unless specifically provided for, a bond must be posted by the executor of a Will, even if it is a close family member. To release any funds or property, a request must be made to the Court. Making such a request does not mean that it will be granted. This can be not only frustrating, but also a great financial hardship.
CONCLUSION
There are many good reasons to take the necessary steps to keep one's estate from needing to go through probate.
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