WHAT IS PROBATE?
Probate is a court-supervised process of distributing and overseeing property after a person dies. It’s purpose is to determine the wishes of the deceased, and then use that determination to guide the paying of debts and distribution of property according to the decedent’s wishes.
The following occurs during a Probate:
• Determination of the executor or the appointment of an administrator
• Authentication of the Will
• Identification of heirs and beneficiaries
• Payment of debts and taxes
• Distribution of property according to a Will or according to State Law
WHAT ARE THE FEES ASSOCIATED WITH PROBATE?
There are state-mandated legal fees be legal fees to Probate a decedent’s estate. The legal fees are set by California State Law and are referred to as statutory rates.
These statutory rate are as follows:
– 4% of the first $100,000
– 3% of the next $100,000
– 2% of the next $200,000, up to $800,000
– the Estate is valued at $200,000, the the fee will be $7,000
– the Estate is valued at $300,000, the fee will be $9,000
– the Estate is valued at $400,000, the fee will be $11,000
Ultimately the value of the Estate is determined by the Probate Referee. It should also be noted that the personal representative appointed to the case will receive the same statutory compensation as the attorney. Therefore, for an Estate valued at $400,000, the personal representative will also receive compensation of $11,000.
WHY ARE WILLS AND PROBATE IMPORTANT?
• To avoid dispute among family members
• To arrive at an amicable solution
• To make sure that all the heirs benefit
• To safeguard the wealth
• To get maximum benefit from the property
• To solve tax liabilities
WHAT IS PROBATE ADMINISTRATION?
An Administrator appointed by a Probate Court – or an Executor named in a Will – is responsible for overseeing the Probate process. A Probate Judge appoints an Administrator if an Executor is unnamed in a Will or if the decedent died without a Will. Usually, the Administrator is a relative or the person inheriting the majority of the decedent’s Estate.
The Probate Administrator/ Executor performs the following duties:
• Obtains the decedent’s original Will
• Hires a Probate Attorney, if necessary *
• Initiates and manages the Probate process
• Cancels credit cards
• Notifies government entitles of the decedent’s death
• The Probate Administrator/ Executor performs the following duties:
* In many situations the Executor or Administrator oversees the Probate, while a Probate Lawyer performs much of the work.
ABOUT WILLS & TRUSTS
Both Trusts and Wills are devices which you can use to provide for the distribution of your Estate upon your death. Deciding whether a Trust or Will best fits your needs depends on your individual circumstances. A Living Trustis a popular alternative to the traditional Will, but you should weigh the advantages and disadvantages of each before deciding on one form or the other.
A WILL IS SUBJECT TO PROBATE AND A TRUST IS GENERALLY NOT SUBJECT TO PROBATE.
THAT MEANS THAT A LIVING TRUST WILL GENERALLY AVOID PROBATE COST.
WHAT DOES A WILL DO?
A Will is the legal document that allows you to distribute your property to those you choose. A Will allows you to designate beneficiaries to receive specific items from your Estate, and other beneficiaries to receive everything else. For example, if you want your house, your car, or your antique thimble collection to go to a certain person or organization, you designate that person or organization as the beneficiary.
Who is going to make sure that your antique thimble collection goes to the proper person? The Executor of your will. The executor’s the person you designate to carry out your wishes.
A Will also give parents of minor children the chance to nominate a guardian. The court makes the final decision when appointing a guardian for your children after your death, but the court will usually accept your nomination. A guardian’s legal responsibility is to provide for your child’s physical welfare.
WHAT DOES A LIVING TRUST DO?
A Will comes into play only after you die, but a Living Trust can actually start benefiting you while you are still alive. A Living Trust is a Trust established during your lifetime. It can be revocable or irrevocable. If the Trust is revocable, it allows for you to make changes.
There are several ways to avoid Probate. Those ways are known as probate avoidance techniques. A Trust is a Probate avoidance technique. Other ways of avoiding Probate is to create beneficiary accounts or payable-on-death accounts, or to have property titled in Joint Tenancy. If you decide to create a Trust, you will transfer those assets named in the Trust to the Trust by assigning all of your interest in that asset to the Trust. For example, your home or any other real property named in or subject to the Trust will be conveyed to the Trust. Those assets not conveyed or assigned to the Trust, or those assets that have not been handled with some other Probate avoidance technique, can be transferred into the Trust at the time of death through the use of a simple Pour-over Will. You should always make a Pour-over Will at the time that you establish your Trust.
A Living Trust will be used as the mechanism to manage your property before and after your death, as well as to provide how those assets, and the income earned by the trust, are distributed after your death. If you should become incapacitated or disabled, the Trust is in place to manage your financial affairs, usually by a Successor Trustee, if you were serving as a Trustee. A Living Trust is not subject to probate, and therefore, all provisions of the Trust will remain private.
Joint Living Trusts are also possible. They simply combine the assets of a husband and wife into a single Trust, governed by a single Trust document. However, if Estate tax minimization is important, the Joint Living Trust must be very careful drafted with the help of an attorney in order to achieve desired goals.