One of the most common goals of a comprehensive estate plan is probate avoidance. If you are relatively new to the world of estate planning, you may have listened to well-meaning friends and family members tell you how important it is to avoid probate; however, they may have neglected to explain why probate avoidance is so important. In order to explain why avoiding probate is such a sought after estate planning goal you need to have a better understanding of the California probate process. Although the probate process is a unique process for each estate that goes through it, there are a number of steps that almost all estates go through during the probate process, including the following ten steps:
- Submitting the Last Will and Testament (if applicable) and petitioning to open probate – the law requires anyone who has an original copy of a decedent’s Will to submit that Will to the appropriate court upon notification of the Testator’s death. If you are the person appointed as Executor in the Will, you should also file a petition to open probate and request the court to officially appoint you as the representative of the estate for purposes of overseeing the probate process. If the decedent died intestate, or without leaving behind a Will, any competent adult may petition to become the Personal Representative (PR) of the estate.
- Identifying, locating, and securing estate assets – as soon as possible after the decedent’s death the Executor/PR should start identifying, locating, and securing the decedent’s estate assets which may include both real and personal property as well as tangible and intangible assets.
- Categorizing assets – not all assets are required to go through the probate process. Because of this, all estate assets need to be categorized as either probate or non-probate assets before probate really gets underway. Non-probate assets will pass to the beneficiaries outside of the probate process. Common examples of non-probate assets include:
- Trust assets
- Proceeds of a life insurance policy
- Certain types of jointly held property
- Accounts designated as “payable on death” or “transfer on death”
- Retirement benefits
- Valuing assets – the Executor/PR must obtain a “date of death” value for all probate assets. Often, professional appraisers are retained to help value estate assets.
- Notifying creditors – creditors of the estate must be notified that probate is underway so they have the opportunity to file claims against the estate. Known creditors may be notified personally; however, unknown creditors are notified by publishing notice of the probate in a local newspaper.
- Reviewing creditor claims – the Executor/PR reviews all claims and approves or denies them. Approved claims are paid out of estate assets.
- Litigating any challenges – if a Will contest is filed, the Executor must defend the Will submitted to probate. If that happens, the probate process effectively comes to a halt until the Will contest is fully litigated because the outcome determines how the estate is probated.
- Calculating estate taxes – all estates are potentially subject to federal gift and estate taxes. If any taxes are due, the tax debt must be paid before estate assets can be distributed and probate closed.
- Selling assets (if necessary) – sometimes an estate lacks sufficient estate assets needed to pay creditors and/or taxes. When that is the case, estate assets must be sold to raise the necessary funds to cover creditor claims and any tax obligation.
- Transferring assets – finally, at the end of the probate process, any remaining estate assets must be legally transferred to the intended beneficiaries under the terms of the decedent’s Will or distributed to the legal heirs of the estate pursuant to the California rules of intestate succession.
For more information, please join us for one of our upcoming free seminars. If you have additional questions or concerns about conservatorship in the State of California, contact the Collins Law Firm by calling (310) 677-9787 0r Click Here reserve for a Free Estate Planning Workshop.