DO I NEED PROBATE AND HOW DOES IT WORK?
Do I need probate and how does it work? These are two questions we get asked most often. While heirs in California may end up in probate court for a variety of reasons, certain situations are way more common than others.
If you are reading this article, chances are, you are going through something similar and looking for the answers. Keep reading to find out who needs probate in California and how a typical probate process plays out.
What’s “Vesting” and Why is it Important?
Consider this: Decades ago, a California couple bought a house. They had three children and build a great life in the Golden State. The couple grew old together. One day, the husband passed away. A few years later, the wife passed away as well.
Three adult children are now trying to figure out how to sell the house. One of them mentions that in order to do so, they may need to file for something called probate. They decide to consult with a probate attorney.
The first thing a probate attorney will do is pull the grant deed to see how the title is vested. “Vesting” is a formal way of saying how one holds title to their property. In California, the most common ways of holding title are as follows:
- Sole owner
- Tenancy in Common
- Joint Tenant
- Community Property
- Community property with Right of Survivorship
- Living Trust
Unfortunately, many Californians who belong to the Baby Boomer generation chose to hold their title as Joint Tenants. Many didn’t have an experienced attorney to advise them. They bought a house, the title company gave them the menu of vesting options, and the couple chose what sounds right or what they heard their peers do, which, in many cases, was Joint Tenant.
This did not present any problems at the time of passing of one of the spouses, as the property automatically went to the surviving spouse. However, upon the remaining spouse’s death, Joint Tenancy, unlike a living trust, does not provide a roadmap as to who is supposed to step into the couple’s shoes and manage the property.
All in all, Joint Tenancy means welcome to probate, unless the real property is worth less than $166,250. Of course, it is nearly impossible to find a property worth less than that in California, so, once again, Joint Tenancy means welcome to probate.
The attorney informs the adult children that they will need probate to sell the house. In essence, probate, while it is a complex process governed by California Probate Code, solves a simple problem: with the original homeowners gone, who can legally take over and sign legal documents, such as listing agreements and other contracts? Who can get on the grant deed and become a legal owner? The probate process is designed to do that so, if the house is sold, the buyers can purchase the property and get a clean title, while the rightful heirs can divide the sales proceeds.
California Probate Timeline
The next big question is how does the probate process work in California? Below you will find detailed and simplified versions of the probate timeline, as well as a summary of a typical probate process.
Probate Timeline (Full)
Probate Timeline (Simplified)
Normally, probate in California takes somewhere between 10 months and one year to complete. That is if the heirs hire an experienced attorney and there’s no fighting between the children. The most common disagreement is about which sibling is supposed to be in charge (appointed as a Personal Representative). An experienced probate attorney will call a meeting early in the process, flesh out the details, and ensure that everyone is on the same page.
The probate process is started by filing a Probate Petition. The purpose of the petition is to present all the details about the decedent’s estate and ask the judge to appoint the Petitioner to serve as a Personal Representative. The petition costs $465, which are paid directly to the court. Think of it as a fee you would pay at the DMV or any other government office. It’s just a fee set by the State of California.
Once the petition is received, a judge will schedule a hearing date. Siblings do not need to attend the hearing – the attorney will handle it. If everything goes as planned during the hearing, the Petitioner will get appointed as the Personal Representative (often abbreviated as PR).
If the heirs wish to sell the house, it can be in the first 90 days of the process. An experienced probate real estate agent will sign a listing agreement contingent on the Petitioner becoming appointed as PR, so they can start marketing the house right away. If all the parties know that they’re doing, the home can be sold in 90 days.
Simultaneously, more documents will be issued by the probate court. The court will arrange a probate referee to appraise the home. The attorney’s office will assist heirs in setting up the estate’s bank account, obtaining a tax ID, etc.
Once the house is sold, the probate process is not finished, even though the buyers get possession of the house. The next step is issuing noticed to creditors, such as Medi-Cal, certain other government agencies, and credit card companies. Once again, a savvy probate attorney can help heirs legally avoid paying certain creditors, thus, saving tens of thousands of dollars for the estate.
Dealing with the creditors takes another 120 days.
Finally, the last 90 days of the California probate process are dedicated to final accounting and asset distribution. As mandated by the California Probate Code, no money can leave the estate account until the judge reviews all the proceeds and expenses and gives his or her final approval. An experienced probate attorney will help avoid any delays or confusion, so all the requirements are satisfied, and the judge has no reason to extend the process.
Finally, the Personal Representative and the probate attorney receive the payment for their services, and all the remaining beneficiaries (heirs) get their shares as well. Whoever paid the initial court filing fee of $465 also gets reimbursed.
So, here you have it. This blog post answers two popular California probate questions: “Do I need probate?” and “How does it work?”