Avoiding Probate...If it's too late, I'll help...
It’s a situations that no one wants to be in, and one that I hope you are never faced with. But the fact is that everyday people die without a will or trust. Dying intestate, or without a will or trust, can raise all sorts of issues that you would rather save your loved ones from. I will save the other benefits of having a will or a trust for your handy, neighborhood estate planning attorney.
For our purposes, let’s talk about how dying intestate affects real estate. When someone dies intestate, what happens to the real estate left behind depends on how the property was held. For instance, was the property, community property or held as separate property. Basically, community property is property acquired by couples while married, where the couple has a shared interest. Separate property is property usually acquired prior to marriage, or by gift or inheritance.
A new law, and the new part is rather important, allows the transfer of property without probate, when a transfer-on-death deed is used. TOD deeds became available in California at the beginning of 2016. However, TOD deeds are automatically repealed on January 21, 2021, unless that date is extended. TOD deeds are not a substitute for estate planning. There are other instances where, even if there is not transfer-on-death deed, the estate may qualify for a simplified probate procedure, for small estates. Property owned in joint tenancy. Again, if you are in this situation, you should speak with your friendly, neighborhood estate planning attorney.
When a person who dies intestate, but does not have a surviving spouse, or if the property is owned separately, the estate will transfer to the surviving spouse, children, and or other relatives. Seems easy enough, but even defining something as simple as children, is not as clear cut as it may seem.
Here’s the rub, when a person dies intestate, and the is an estate that needs to be divided, probate is usually required to do so. When there is no executor named, because there is no will or trust, usually a family member will file a Petition for Probate with the probate court. This starts the process. There are some filling fees associated with this process, but the largest cost will come from attorneys fees. In California the proscribed probate fees set forth in Cal. Probate Code §§ 10810, 10811 are:
4% of the first $100,000 of the gross value of the probate estate
3% of the next $100,000
2% of the next $800,000
1% of the next $9 million
.5% of the next $15 million
Keep in mind that for the purposes of the probate fees, they are based on gross value of the fair market value of the estate. Fees are not based, for instance, on the equity in the estate. A simple example, consider that your home has $50,000 in equity when you die (you never planned your estate, so it goes to probate court). But your home’s fair market value (based on a probate referee’s appraisal) is $100,000. The 4% of the first $100,000 is based on the value of the home, not the equity. So, the probate fee is 4% or the $100,000, or $4000, not 4% of the equity, or $2000. As the value of the estate grows, so does that number.
It should also be remembered that the executor/administrators fees are identical to that of attorneys fees. The cost of probate become steeper and steeper.
Perhaps just as costly is when family members contest the estate. Unfortunately this can be a very trying experience, and can do damage to families.
Selling property in probate
The process of selling a home in probate requires a few extra steps, but working with an agent who is familiar with the process will make it feel like any other sale. The main purpose of selling a property in probate is to liquidate real property so that proceeds can be more easily divided among inheriting relatives.
If you are in such a position, I can help make the entire process, much easier, and smoother. What is better is to avoid the entire process altogether. The best way to do so is to plan ahead. I think it’s been said that there is no time like the present. And in this case there really isn’t. If you wait until you need it, it’s likely too late.
Visit www.jonpettylawfirm.com for some helpful resources regarding estate planning. And, if you’re in need of help with the sale of a home that is in probate, or may need probate, don't hesitate to call…
If you find yourself in a situration where you may need help with the probate process, please start by consulting a estate planning attorney. If you would like help navegating those waters, I'm happy to help. The inofrmation above is only meant as a educational startign point.