Throughout the previous five years, the economy has been on a roller coaster ride and home estimations have risen dramatically. Often when a loved-one passes away without a Trust, a probate case is required in order to transfer the real property to loved ones.
You might be wondering, “What is probate, and why is everyone trying so hard to avoid it?” The short answer is that probate is a court-supervised procedure for collecting a deceased person’s assets, paying debts and taxes, and distributing the property to the person’s beneficiaries (either according to the instructions the person set forth in his or her will or as determined by state law if the person died without a will). The probate process usually takes 12 to 18 months to complete, although it may take longer in complicated cases or instances where real property needs to be sold.
Probate is not a tax. When people refer to the high costs of probate, they are usually referring to the fees paid to attorneys and the personal representative. In California, these fees are calculated as a percentage of the gross (not net) value of the assets in the estate. These rates are set out in Probate Code §§10800 and 10810 (4 percent on the first $100,000, 3 percent on the next $100,000, 2 percent on the next $800,000, and so on). For example, let’s say that an individual who is not married dies owning one asset, a house worth $200,000 with a mortgage of $120,000. The Decedent has a will leaving the house to his two children, Ben and Betty. Ben is named as executor. The probate fees for this case would be as follows: $7,000 to Ben’s attorney (plus any “extraordinary fees,” which are billed hourly but subject to court approval) and $7,000 to Ben (if Ben decides to take a fee). These fees are calculated without regard to the $120,000 mortgage, because the fees are based on the gross (not net) value of the estate. In addition, there are petition fees (currently at $435 for the petition to open probate and $435 to close probate), publication fees and appraisal fees.
The other objection some individuals have to probate is that it is a public forum. Court documents are available for inspection by the public as are the hearings. On the plus side, you are not paying for probate – your estate is. The real issue is whether or notyour want your estate diminished by the associated costs of probate. Remember:all assets held in your individual name – whether you have a will or don’t have one – are subject to the provisions of the Probate Code.
Please call Hedtke Law Firm today to determine if a Probate Pomona is required.