Avoiding probate is important but most people do not know why. There are a few problems with probate. First, it can be very expensive. Second, probate is a very lengthy process that can tie up property anywhere from six months to two years. Finally, probate is a public process where anyone willing to travel to the courthouse can obtain copies of the will and associated court documents.
The Probate Process
The probate process is meant to provide protection to creditors and beneficiaries. The probate process involves filing a petition with the court, publishing notice of the probate in the newspaper, mailing notice to persons entitled to receive notice, filing a bond, taking inventory of assets and having them appraised, giving notice to creditors, paying debts including filing tax returns, filing a final accounting with the court and distributing assets. The length of the probate process may be extensive if there are contesting parties.
Both your lawyer and your Executor will be entitled to fees from your estate. In California, these fees are set by statute and based on the total value of the estate. The value of the estate is calculated using the appraisal value of the assets at the time of death, without taking into account any encumbrance, such as a mortgage. The attorney and executor will receive compensation as follows: 4% of the first $100,000 3% of the next $100,000, 2% of the next $8000,000 and 1% on the next $9,000,000. It is common for the executor to waive their fees, especially if they inherit a substantial amount of the property. However, there are other costs including court costs, appraiser fees, and other miscellaneous expenses.
Probate can be avoided with advanced planning. A fully funded trust allows the trust terms to control rather than state law, as is the case with probate. There are fees associated with administering a trust, but they can be less expensive than probate, particularly where a family member handles the administration. More importantly, trust administration is private and typically, the assets can be transferred to the rightful beneficiary much faster.
To learn more about the advantages of advanced planning, contact a San Diego Probate attorney at our office.