Probate is the court supervision of the distribution of assets of a deceased person after payment of taxes and creditors.
Probate can be in accordance with a will, whereby the deceased person leaves written and witnessed instructions as to the disposition of his or her estate (this person is said to have died “testate”). Or Probate can be in accordance with the laws of the State of California, if the deceased person died without a will (this person is said to have died “intestate”).
In either event, the process of probating the estate of the deceased person is the same. More on that later in this article after I answer the question as to whether a probate is always required when someone dies.
If the deceased person has a trust, and the trust has been “funded” with the assets of the deceased person prior to death, those assets transfer in accordance with the terms of the trust, no probate required in that circumstance. However, even if a deceased person has a trust, if the trust is not funded with the assets of the deceased person prior to death, a probate will be required as to those assets that should have been in the trust but were not transferred to the trust, in order to ultimately have those assets transferred to the trust for distribution in accordance with the terms of the trust.
“Funding” a trust means transferring title of assets to the trust. For example, if the deceased person owned Blackacre, there was a deed by which the deceased person initially acquired Blackacre. After the trust is created, the deceased person should have recorded a new deed, transferring ownership from the individual, to the individual as trustee of the trust. In that event, the trust has been funded with Blackacre. Similarly, financial institution accounts can be re-titled, to show that the owner of the account is the trustee of the trust; in that event, those financial institution assets are funding the trust.
Another way of holding title is “joint tenancy” which, in California, includes the right of survivorship. This means that when one of the joint tenants dies, the survivor takes over ownership of the deceased joint tenant’s share in the property; no probate required in this situation. A similar situation exists with respect to married couples who hold title to real property as husband and wife, as community property, with right of survivorship. All that is required is recording an Affidavit – Death of Joint Tenant to transfer ownership of the joint tenancy interest.
Financial institutions offer “Payable on Death” or “POD” accounts. This is a designation that requires the financial institution to pay over the proceeds of the account to the identified individual(s) who is to receive it, as directed by the deceased person.
Life insurance also does not require probate, assuming that there is a named beneficiary for the proceeds. If there is no named beneficiary, there may be a required probate. This is also true for retirement benefits; typically, if married, the spouse is named as the primary beneficiary. Probate should generally not be required in this event.
There is law in California that if the personal property assets of a deceased person, exclusive of those in trust or which pass by operation of law (e.g. joint tenancy property, POD accounts, life insurance, retirement benefits) do not exceed $150,000.00 in value, a beneficiary may execute an affidavit requiring a financial institution to deliver those assets to the beneficiary, no probate required in that circumstance. This procedure does not apply to real property; for real property, the limit is $20,000.00 in value.
Someone has died; the relatives have gone over all of the assets and it is determined that there has be a probate as to some of those assets…. what then?
The process is started by filing a petition for probate with the Superior Court for the County in which the deceased person had their residence at the time of death (if they lived out of State but there is property in California, the petition is one for an ancillary probate).
Notice is given to all those concerned as well as being published in the newspaper. Assuming no one has filed objections, all the paperwork has been properly submitted, published and served, the court will order the commencement of a probate with a person appointed as executor (testate) or administrator (intestate).
The duty of that person (also referred to as the personal representative of the estate) is to ascertain who the creditors of the deceased person are (by giving Notice to Creditors) and to inventory the assets of the deceased person. The personal representative can value cash assets for purposes of the inventory and appraisal but any other type of asset (e.g. real property, securities, art collection) requires valuation by a probate referee. Probate referees are assigned to value an estate by the court.
Once the inventory and appraisal has been filed, the time for filing creditor’s claims has run (typically four months from appointment of the personal representative), the personal representative has paid the claims and final tax returns for the deceased person have been prepared and filed, the personal representative can begin the process of closing the estate and distributing the assets.
For further information, contact Messina & Hankin at (951) 363-2134.