You might have heard someone talk about probate and probate court. They may be commonly referred to in movies and TV shows. However, many people need a clear idea of the purpose of probate. The average person is unaware of it until they fall prey to it.
The purpose of probate is to transfer the property legally after a property owner’s death. It consists of the gathering of all assets and paying off debts. Probate also includes distributing any remaining assets per an estate plan and the law. The Court will issue an order declaring that a deceased person’s Will has been proved and registered in the Court. It will also state that the Executor identified in the choice has been granted authority to administer the estate.
Probate in California
With a few exceptions, probate is necessary for California if an individual has or has not made a will before death. The financial responsibilities of the deceased person’s estate must be dealt with during this legal process. Must notify the creditors of the estate of the death. All of the estate’s assets will be accounted for, and will pay money to the creditors. The estate assets will pay the costs and fees associated with the probate process. Whatever remains in the estate will be distributed to the decedent’s heirs or beneficiaries. If the person who died has no transferable property, probate is typically not necessary.
What Happens If No Probate is Filed?
If you know that someone has died with a will, most states require that you file the Will within the probate court. This is regardless of the decedent’s financial situation.
Here in California, the law requires any person holding the original Will of a deceased person to file the Will with the county’s court clerk where the decedent lived. A copy of the Will must also be mailed to the Executor. If the Executor’s whereabouts are unknown, a copy should be sent to the beneficiaries.
Note that filing a will isn’t the same as filing probate documents. It is just that — filing the Will.
You could be held liable in both criminal and civil courts if you knowingly neglect to file an existing will. You must deal with the resulting damages to any party who would have benefited from the estate.
Even if you file a will or there is no will, it may still be necessary to file probate documents to settle the estate. Here are three essential reasons why you need to file probate documents:
- Legal title to assets could be clouded.
You must legally transfer the decedent’s assets with court approval through probate. These include real estate, a car, or a retirement account without a named beneficiary.
- Heirs could have legal claims against you.
The probate court will determine the appropriate inheritance priority through the state’s intestate succession laws.
If you fail to file probate documents, the heirs may not receive what they are lawfully due. They could end up suing you, and heirs have rights to, even if they are in jail.
- Problems with an existing Will could still be solved.
Sometimes, there are questions about the decedent’s competency when signing or the validity of the signatures. If there are such issues, they can only be addressed and resolved through the probate process.
Which assets must go through probate?
Following the death of a loved one, you may find yourself looking for information about how to deal with all the stuff and properties the deceased has left behind. It is easy to deal with small items. Your daughter gets dad’s book collection, while your son gets dad’s desk. However, the situation may be more difficult if you deal with a house or a stock portfolio.
How can you change the legal title to such assets so you can manage them as a trustee or Executor? You will find the answers in a properly prepared trust document if these properties are in a trust. In this situation, involving the California Superior Court in administering the trust estate is no longer necessary.
However, if your loved one died without trust, or if he passed away with assets not held in trust, you need to start a probate proceeding. Note that the value of the probate estate should be more than $166,250.
Usually, the following assets are considered part of the decedent’s probate estate. They are subject to the probate process.
- Individual Assets
Individual assets include all properties in the sole name of a deceased without co-owners or payable-on-death and beneficiary designations. These include bank accounts, stocks, mutual funds, investment accounts, bonds, vehicles, business interests, royalties, unclaimed death benefit checks, and real estate.
- Tenants-In-Common Property
Tenant-in-common properties include property the deceased holds as a tenant-in-common with one or more other persons. Each owner has a percentage interest in the property. There do not need to be equal percentages of ownership in a tenancy in common. It can be 50 percent and 50 percent or 70 percent and 30 percent.
Most of the time, real estate is titled this way. This form of concurrent ownership does not require individuals to be married or registered domestic partners. Moreover, they do not even need to live on the property.
Aside from real estate, other types of assets can also be titled this way. These may include bank accounts, investment accounts, stocks, and bonds. Dozens of institutions can help you discover an unclaimed property. No one will come to your doorstep and hand you an envelope filled with money or checks that belonged to the decedent. The discovery process is not easy but is legitimate; it needs patience and persistence. Ask for a report on finding the assets and money that may belong to the person you represent in Probate court.
Properties owned with rights of survivorship go directly to the survivor if one of the owners dies.
If, before his death, the decedent retitles his tenant-in-common interest into the name of a living trust, this changes the tenant-in-common interest into a non-probate asset. It can be passed on to the new owner without a probate court proceeding.
- Beneficiary Assets With Predeceased Beneficiaries or No Beneficiary Designations
If the beneficiary dies before the owner, even the properties with the beneficiary or payable-on-death designations can become included in the deceased’s probate estate. These involve health savings or medical savings accounts and life insurance policies. Retirement accounts, including IRAs 401(k)s and annuities, are also included.
If all the named beneficiaries of an account or policy are passed on before the decedent, the asset will be diverted to his estate. They will become part of his probate estate.
- Assets Left out of a Trust
Sometimes, an individual creates a living trust and moves his assets into it. However, this does not necessarily mean he will have no probate assets at his death.
Living trusts are one of the means to avoid probate of property. However, years may go by during which the decedent acquires more assets. He may need to remember to pass all of them to his trust.
One solution to this problem is to create a pour-over will. This will direct all properties outside the trust into the trust when the owner dies. However, these properties are still subject to probate. They contribute to the decedent’s probate asset.
I understand how intimidating the probate process can be. I am here to make sure you know every step of the process. My expertise in probate sales can make all the difference in your experience.
It is straightforward to initiate a discussion; contact me at your earliest convenience; time is of the essence!