Law office of Sonja M. Panajotovic

What is Probate?

Probate is the legal proceeding in which a court determines how an estate will be divided. The court will follow your Last Will and Testament in distributing your property, unless it is contested by your heirs.

Some people think having a will avoids probate. This is not the case. A will is used in probate to determine who receives what property, who is appointed guardian to any minor children and who will be responsible for carrying out the wishes contained in the will.

If an estate includes real estate or minor children, a formal probate action in court is generally required. However, if the value of the estate does not exceed $150,000, and there is no real property, probate is not mandatory in California.

Probate can be very expensive if you do not plan correctly. For instance, if you do not have a will, the court will need to appoint an administrator. This can take a long time and cost a great deal of money. The court will often charge a hefty fee (ranging from 5-15% of the value of your property) to probate your estate.

To avoid probate, other estate-planning devices should be used. Joint tenancies, pay-on-death accounts and living trusts are some of the most common estate planning methods.

The Basics About Wills

What Happens if You Die Without A Will

If you die intestate (without a will), California laws will determine who receives your property. Generally the distribution would be to your spouse and children, or if none, to other family members.  The State's plan may or may not reflect your actual wishes. A will allows you to alter the state's default plan to suit your personal preferences.

What A Will Does

A will provides for the distribution of property owned by you at the time of your death in any manner you choose. A Will also allows you to appoint a guardian for your minor child(ren) if you have survived the other parent, eliminate the need for bonds, and designate an executor of your estate.

What A Will Does Not Do

A will does not control the transfer of certain types of assets, called nonprobate property, such as property held as Joint Tenants With Rights of Survivorship, or assets that have beneficiary designations, such as IRA's, retirement benefits, life insurance, annuities, or payable on death accounts.  Such assets get distributed directly to the beneficiary. 

Trusts

The popularity of the living trust has soared in recent years as more people discover its significant estate planning benefits. Like a will, a living trust allows you to transfer property to your beneficiaries--but with one important difference--a living trust is not generally subject to probate (which can tie up your estate for years and consume a large portion of its value in court fees).

Who Needs a Living Trust?

Any California resident with an estate of $150,000 or more can benefit from having a living trust. Whether an individual has a will or not, estates with assets of over $150,000 generally must be probated.  Probate is a lengthy and costly court proceeding wherein the court supervises the administration and distribution of the deceased person’s assets.  In a probate proceeding, the court will determine the validity of the will (if there is one), or determine the rightful beneficiaries (if there is no will), ensure that the deceased person’s debts are paid, and then oversee the distribution of assets to the beneficiaries. A probate proceeding can take, on average, up to two years before the assets can be distributed to the beneficiaries. 

Establishing a living trust can be an efficient and effective way to transfer property to loved ones without the expense, hassle, delays, and public disclosures of a probate proceeding.  Essentially, a living trust is similar to a will.  However, the important difference between a will and a living trust is that property left by will must go through the probate process whereas property left by a trust can simply be transferred to the beneficiaries quickly and without the need and expense of court intervention. The Trustee simply distributes assets to the named beneficiaries as long as those assets have actually been placed inside the trust.

People often carry the misconception that having a “trust” is very complicated and is only for the super-rich.  This is simply not true!  A trust does not require any special accounting or tax records, it simply requires changing the name in which assets are held.  For example, once a trust is created, a house in the name of John and Mary Smith should be transferred to the Smith Living Trust.  Names on bank accounts should also be changed to the name of the trust. However, the fact that the assets are now in a “trust” has no practical affect on one’s rights to, or interest in, his or her assets. John and Mary may still sell their house, spend their money, write checks, obtain mortgages, or give their assets away during their lifetimes.  Essentially, a living trust is a document that only becomes important upon death. With a trust, upon death, property placed in a trust can be transferred privately and without the waste of time, money, and headaches of probate.