What happens to you after you die? We can’t tell you that much, but we can tell you what happens to your assets. If you die without a trust or only a will, most or all of your assets may be frozen until the courts have completed a lengthy and costly process called probate. Only after probate and with the blessing of the court may your estate pass to your heirs.
Probate is a legal process that is used to divide remaining assets upon an individual’s death when there is no trust set in place to do so. Thus, even with a will, an individual’s assets become public knowledge through the court system and a date is set to determine their distribution. A personal representative, whether it be a family member or a professional fiduciary, needs to be appointed by the court to handle the affairs of the estate.
Assets Subject to Probate:
The first step is to calculate the value of the probate assets by determining which assets in the estate are considered probate and which are not. An asset will not be considered subject to a probate if it is held in joint tenancy, property in which the decedent had a life interest, property with a right of survivorship, property with a pre-designated beneficiary, and any payables on death (POD). A probate proceeding is required if the value of the remaining probate assets located in California are greater than $150,000 (or real property valued in excess of $50,000).
The Probate Process:
Assuming probate is required, the person requesting appointment as personal representative will need to submit a petition with the court and may need to hire an attorney to assist with this process. The probate attorney or the petitioner mails a notice to the decedent’s legal heirs and/or those named in the will, as well as potential creditors, informing them of the death and probate hearing. The notice gives interested parties the opportunity to object to the will and to the the appointment of the personal representative.
After the notice, the hearing takes place at least a month later, and the next step of the probate process begins. If there are no objections to the decedent’s will, the petition will be approved and a representative will be appointed by the court.
The personal representative must then account for and take possession of probate assets to prepare for future distributions, which can take about a year. Once outstanding debts are paid, the probate judge will authorize the representative to divide assets amongst the beneficiaries. Upon their distribution, the probate process is finalized. The entire probate process may take about 1.5 to 2 years.
As you can see, the probate process can be daunting. However, those who establish a plan for their estate can shield themselves and their families from the headache of endless paperwork, legal confusion, and unwanted public attention. In many situations, a trust may be the best vehicle to avoid probate. In other situations, simply changing title to create a joint tenancy or other similar vehicle may be sufficient. A trust is an arrangement which trustees take title to property for the purpose of protecting or conserving it for the beneficiaries. A trust may be created during an individual’s life (inter vivos) or at the time of his or her death under a will (testamentary).
Please feel free to contact your L&B professional at 858-558-9200 to further discuss these details.