Santa Clarita Attorney Discusses the Probate Process

VIDEO TRANSCRIPT:
​Hi everybody, this is Rob Mansour, and I'm making a brief video today about the probate process in California. So sometimes we have clients and they call and they say, "Hey, I need your help with a probate matter" or "Can you help me or guide me with a probate question?" So really the first threshold question is whether or not a probate is necessary at all.

So if some clients have a living trust, for example, and all of their assets are in the name of the trust, so for example, their house is owned by the Smith Family Trust, their bank accounts say Smith Family Trust, all of that would not need probate. So we don't really need to go to the probate court for that. Sometimes people are told by banks and other institutions that they need to go to probate, but upon closer inspection, we find out they don't really need to go to probate court at all.

So what we generally do is we have to do an analysis. So the first thing that we do is we gather all of the client's assets or we make a list of them. So all of these business cards, for example, represent all of the client's assets. Let's say Mr. Smith passed away, I get a call from Mr. Smith's children and they say, "Hey, do we need to go to probate court at all?" So generally this is how it works. We take one asset at a time and we ask ourselves the following question, "Was this asset in the name of a trust?" If the answer is no, then "Was the asset held jointly?" For example, was Mr. Smith on the account along with one of his children if that was the case, or perhaps his wife? If that is the case, then the other person on the account gets all the money.

So let's say Mr. Smith has a bank account with $100,000 in it and his son Johnny is on the account with him. Well, Johnny gets all that money. That's a joint account. Now whether Johnny wants to take that money and go to Vegas or whether Johnny wants to share that money with his siblings is a whole other discussion.

And then we go through each asset and we ask ourselves the same questions, "Was it in the name of a trust?" "Was it jointly owned?" If it wasn't jointly owned, then perhaps the individual had a beneficiary on the account. So for example, when they opened the account, it's just in Mr. Smith's name, but maybe he named his daughter Jenny as the beneficiary of that account. If that is the case, then that money goes to Jenny, whether she chooses to go to Vegas or not with that money, that's her decision. She can go and buy a new car with that money, she can do whatever she wants. That's her money. Again, whether she chooses to share with her siblings is a whole other discussion.

So then that leaves us with a handful of other assets. Now, if these assets were only in Mr. Smith's name, such as a house or a bank account, etc, and if the total value of those things exceeds $184,500, which is the current limit in California, that's the current threshold. Now, that number used to be lower than that, and it changes every few years so you need to make sure that you check and make sure that that is the correct number. But anyway, if the aggregate amount exceeds that threshold number, then you might have to go through the probate court process after all.

So basically, not all the assets may need to go through probate. Some of them might and some of them might not. So let's assume for the sake of discussion that some of the assets have to go through the probate process. So here's how it works. You hire a lawyer generally to help you with this process, although some people are very, can-do kind of people, and maybe they do this on their own, but let's say you hired a lawyer and you did things the traditional route.

The first step would be the attorney has to petition the court to open the probate. Basically, they have to file some paperwork with the court asking the judge to open a probate for this particular estate. And to do that, they need somebody called an "executor." So the executor is basically the person in charge of the probate. So usually it's one of the kids. It could be a friend or a family member, and usually the executor would be listed on the will. That's where you find the executor. Now, if there was no will and there is no executor, then generally somebody has to volunteer to do that job. And in the California probate code, there is a hierarchy of people who are allowed to do that job. But generally speaking, as long as there's no major objection, somebody can step forward and become the point person for the probate and they become the executor or administrator of the estate.

Now, with these initial filings, you have to pay a filing fee, which is about $500. And then what happens is the court will open the probate and at the initial hearing, generally they will approve the executor. And in some cases the judge might give the executor great latitude to do whatever they want during the probate process, such as sell the property, do this or that.

There is a valuation of the estate during this period of time, and the court will have somebody at the court who is in charge of evaluating the estate. Usually this person is called a probate referee. And then you might have your own opinion about the evaluation of the estate. Either way, the estate will be valued at some point, and then what happens is the judge is going to give "permission slip" to the executor to do what they need to do. And that permission slip is generally called "letters testamentary."

So "letters testamentary" is something you might hear from when you go to the banks and stuff like that.  They might say, "We need letters testamentary from you." Or you might get letters that say "we need letters testamentary." All that really means is it's a permission slip from the judge.
So Bob or whoever the executor is can go and do what he needs to do. And basically armed with that permission slip, if you will, the judge, they can go do all of these things including sell the real estate if necessary.

Now, there's also a period of time that creditors need to be notified about the probate process, and they have a certain period of time within which they need to file a claim - a "creditor's claim" with the court where they say, "Hey, we're owed $10,000 from Mr. Smith's estate," or "We're owed $50,000." And basically if they don't assert a creditor's claim during that period of time, they might be out of luck and they can't come back later and say, "Hey, we need, we want our money." Well, it's too late now. You had your chance, you had a period of time within which to file your claim, but you didn't do it. So now you're out of luck.

And then basically what happens is once everything has been administered, once the property has been sold, all the assets have been collected, then what happens is a petition will be filed with the court asking the court to close out the probate, to finish the probate. Then what happens is the judge will issue an order. And this is the order where the judge says, "Hey, this is what the lawyer's fees are going to be. This is what the executor is going to get paid." And it's all based on the value of the estate. By the way. Typically it's 4% of the first a hundred thousand, 3% of the second, a hundred thousand 2% of the next 800,000, etc. And you can find probate calculators online where you enter the amount of the estate going through the process, and that will give you an estimate as to what the lawyer's fees are going to be. And if the executor wants to assert a fee, typically the executor gets paid the same as the attorney.

And then after all of that is done, the court will then order the distribution of the estate, and the executor needs to see to it that everything is distributed. There might be some additional paperwork filed with the court at the very, very end of the process.

Now, the probate process can take as little as maybe nine months to two years depending on the complexity of the case, depending how backed up the court the courthouse is and how many cases the judge is handling at the time. But as a general rule, you want to avoid the probate process. And one of the best ways to do that is to create a living trust and that living trust will own all of the assets instead of the individual.  The nice thing about a living trust - - so say that this cup right here is the living trust and all of the assets are inside the living trust and owned by that living trust. The living trust doesn't die. It doesn't get cancer, it doesn't get Alzheimer's disease. It because it doesn't get dementia, it doesn't get pancreatic cancer. It just keeps on going. And after the individual dies, there's no need to go see the judge because this thing owns all the assets and a new "CEO" steps in to manage this trust. That "CEO" is called the "successor trustee."

If you have to go through the probate process, the best thing to do is to contact an attorney and work through the process with that lawyer. Let the lawyer take a fee. It's better than you doing all that work. Whether or not you choose to take a fee or not is up to you. Hopefully the process doesn't take as long as you might fear.

In any event, the judge wants to make sure that the right people get the assets, and that's why it is a court supervised process. But you can avoid all of that if you create a living trust. But that's another video for another time. My name is Robert Mansour, and hopefully you found this video helpful. If you need help or guidance with your probate matter, please feel to contact our office. Take care. bye-bye.