When I meet with my San Jose clients, one of the most important topics is how to avoid probate after one spouse dies. When you are grieving the loss of a spouse, the last thing you want to have to worry about is a complicated legal process. Understanding the legal process ahead of time can help prevent you from being caught off guard.
Now, a common misconception is that if you have a trust and estate plan, that there is no need to do an administration until the second spouse dies. However, anytime a person dies, their estate needs to be settled. This is generally done one of two ways: either through probate, or through an estate administration. If your spouse died and you are facing probate, you likely have a lot of questions, including “What is probate?” I hope that I will answer a lot of your questions with this blog, but if you have questions that are not answered, please reach out for an appointment.
What is Probate?
If a person dies without an estate plan, or with an inadequate estate plan, then their estate will likely have to go through probate. Probate is the legal process of administering a person’s estate after their death. If your spouse had a will when they passed away, the probate process involves validating that the will is legally valid, executing the will per your instructions, settling any debts that remain, and paying any applicable taxes.
Now probate can be an overwhelming and confusing process but having a well written will is a great way to make the probate process easier on your loved ones. Your will outlines who will handle settling your estate, as well as who will inherit your estate. Here at Copenbarger, we believe that your legacy matters. I often talk with my Northern California clients about how they can leave a legacy, regardless of the size of their estate, and how their estate plan can help them. By leaving a will, or trust, you are able to not only relieve a lot of the stress that comes from having to settle an estate without any instruction, but you are also able to dictate where you want your hard-earned resources to go.
Many of our clients prioritize making sure that the government does not get their estate. By leaving an estate plan, you are able to control who will benefit from your assets, which plays an important role in establishing your legacy.
Legal Terms to Know
Often clients feel like estate planning terminology is another language. When you have lost a loved one, it can be so helpful to have at least a general understanding of the terms so that you do not feel as overwhelmed.
- Probate: process of deciding where, how, and to whom to distribute the decedent’s property.
- Decedent: the person who died.
- Will: a legal paper that lists a person’s wishes about what will happen to his/her property after death.
- Executor: A person named in a will and appointed by the Court to carry of the decedent’s wishes.
- Personal Representative (aka Administrator): The person responsible for overseeing the distribution of the estate.
- Intestate: When someone dies without leaving a will.
- Intestate Succession: The order of who inherits the property when someone dies without a will.
- Testate: When someone dies leaving a will.
- Beneficiary: A person who inherits when there is a will.
- Decedent’s Estate: All the property (real or personal) that a person owned at the time of death.
- Heir: A person who inherits when there is no will.
The Basic Probate Process
If your spouse died with a will, the executor named in the will (likely you) is who starts the probate process. If your spouse did not leave a will, then you will need to ask the court to appoint you as administrator of the estate.
As the executor, it is important to know that the probate process can last anywhere from 1-3 years on average, depending on how complicated the estate settlement is. I highly recommend obtaining legal counsel to assist you with the probate process. It is often very complicated, and we find that clients who attempted the process on their own, come to us months in because they discovered how much work goes into settling the estate. When you are grieving the loss of a spouse, we are there to take a huge part of the burden off of you so that you can focus on the grief, rather than being forced to focus on an arduous legal process.
However, if you do decide to try it on your own, the first step you take is to file the will, along with a petition for probate, with the probate court in the county where your spouse lived. There is a cost associated with this filing, so it is important to check the county you are filing in to see their fee. Assuming your spouse had a will, the Court must validate the will. Until the Court validates the will, you are not allowed to distribute or discard of any property.
After this, the Court issues “Letters Testamentary” appointing you and granting you authority over the estate assets.
One you have the authority, you can being gathering your spouse’s assets. It is important to stay organized and keep all bills and receipts because you will need to compile and file an inventory and appraisal of all probate property. If this seems overwhelming, the good news is that we often take a majority of the burdens off of our clients. Rather than their having to gather and keep track of the documents, our clients gather the documents and then send them to us to deal with. Again, our goal is to allow you to focus on what matters – your grief, your family, and your spouse’s legacy.
Most probate cases in California are administered under the Independent Administration of Estates Act. If your spouse established their will with Copenbarger, then any probate matter would fall under this Act. This Act allows you to take care of the administration without having to get permission from the Court. You can generally sell property, pay taxes and bills, and handle the day-to-day tasks without needed the Court’s supervision.
In California, creditors must come forward within four months after your spouse passes away. Most of the time, creditors do not need to come forward as you will pay bills as they come in and cancel any accounts that should not continue. However, it is important to note that for assets like real property, those do need insurance maintained. If you have questions about which accounts and bills to stop, please contact our office.
After all bills and taxes have been paid, you will ask the Court to close the estate. Once this happens you are able to distribute the assets to the people who will inherit them. In a lot of cases, you as the surviving spouse will inherit a majority, if not all, of the assets. However, if your spouse had a will, this dictates the distributions. If your spouse did not have a will, then the Court will use intestate succession to determine who will inherit the estate.
Why You Want to Avoid Probate
For our clients who have experienced probate, or any court proceeding, we do not have to convince them why they want to avoid probate. However, for the those who have not had to experience the pain of court, I am here to tell you that you want to avoid probate. I unfortunately have personal family experience with the probate process and can attest that it is a nightmare. It has caused significant time delays and an incredible cost. For those who do not know why probate is so painful, I am here to help you understand.
Access to Money May Be Restricted
First of all, you may not have immediate access to cash. After you spouse dies, it can take weeks, or even months, to access their cash. If you have a spouse who does not work and does not have access to their own funds, they could be left trying to figure out how to pay for even basic living needs, such as groceries or gas for a car. In some households, we see that only one spouse was on the bank account because they were the one who managed all of the finances and paid the bills. If this spouse passes away, you may be left with bills coming in that you cannot pay using your spouse’s account.
In other scenarios, the surviving spouse is incapacitated and cannot access the funds in the account, nor can they serve as the executor. Now someone else has to find a way not only to administer the decedent’s estate through probate, but may be forced to pay out of pocket until they are granted access to these accounts.
The Court, Not the Family, Is in Control
One of the most frustrating pieces of my grandma’s estate going through probate is that we are on the Court’s schedule, and it is all governed by their rules. Whenever you go through the probate court, your spouse’s estate being settled is governed by the Court’s rules, and the Court’s timeline. As a result, there is frequently a large time delay that could have been avoided by using a Trust and going through the administration out of court, but there is also generally a much larger fee owed to settle the estate.
Probate Costs A Lot of Money
Probate is expensive. At the end of the day, probate can cost 2-5 times what an estate administration would. The probate fees are set on the gross value of the estate, rather than the net value. The probate fees are 4% of the first $100,000 of the estate, 3% of the next $100,000, 2% of the next $800,000, and 1% of the next $9,000,000. A fee is also applied for the attorney, and the executor of the estate.
For an estate with a gross value of $1,500,000 the probate fees would be $5,500. The attorney and executor each are entitled to a fee of $5,500 which would make the probate $16,500 to administer.
Private Information Becomes Public
For most of us, information we kept private during our lives, we would want kept private after our deaths. Probate is a court proceeding, which means all of the information about your spouse’s assets, liabilities, beneficiaries, and who you are become public record. Avoiding probate allows you to keep family matters and your financial information private.
How to avoid probate in the future
One of the best ways to avoid probate is to establish and fund a Trust. Your Trust is designed to hold title to your assets so that it determines where your estate goes and who is in control of it after you pass away. One of the most important aspects of a Trust is ensuring that it is properly funded, which means transferring your assets to the Trust. If you have a Trust and do not know if your assets are properly in the Trust, please speak to us. If you do not have a Trust please set up an appointment with one of our attorneys so that we can help you avoid probate.
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Copenbarger Law Firm2020-05-01 12:11:202021-10-24 09:10:41Sacramento Estate Planning and Terminology
