What To Expect In California Probate

So you have been named the executor (if there’s a will) or are prepared to become the administrator (if there’s no will) of an estate in California. Now what?

Let's start with a simple question:

 

Do you need to go through probate in California?  

Probate is the process of transferring the assets of the deceased to the rightful heirs. Probate is completed by “proving” the will (if there is one) in a court of law or by verifying the legal heirs a when there is no will (called Intestate Succession).  In addition to ensuring the appropriate transfer of assets, probate also guarantees that all the affairs of the deceased are closed  — that tax returns are filed, valid debts are handled, and funeral expenses are paid.

Given that probate is mostly about the transfer of assets, you really only need probate when there are assets that need a court order to be transferred.  Read more about what assets go through probate here.  

In certain special circumstances, probate may be needed even if there are no assets to probate. For example, probate may be necessary if there are future payments that will be made to the deceased and only the estate can be the recipient.  Situations warranting probate without current assets could include things like expectation of future payments from a pension plan, a lawsuit where the deceased is the recipient of proceeds, or the family’s decision to initiate a wrongful death suit.

California does have simplified small estate procedures for estates that qualify for the following special circumstances:

  • Estate assets are under $150,000 with no real estate
  • Estates assets are under $150,000 with real estate
  • Estates that have a surviving spouse or domestic partner

For all other estates with existing assets, you will need to go through full probate.  This simply means that the probate court will be involved and will supervise the process. You will need to communicate with the court at various steps.

 

The probate process in California

1) Petition The Court

This is the first step in the California probate process. You will tell the court about the deceased, whether there is a will, who will be responsible for administering the estate, who the next of kin are, and a rough estimate of the assets.

The court will set a hearing to allow anyone to challenge the facts of the petition. Prior to the hearing, you will need to notify the next of kin and anyone named in the will (if any) as well as make a public notice in a local newspaper announcing the hearing and petition.

Potential Challenges

When there is a will, the valid challenges are:

a) There is a more recent valid will, and that will should be probate
b) The deceased was not in their full mental capacity when they signed the will
c) The signature of the will is forged

When no will exists, a person can only challenge facts in the petition or who will be named as administrator of the estate.  

If there is no will, the priority of administration goes as follows:

a) Surviving spouse
b) Surviving children
c) If there is no spouse and there are no children, then:
     1) Surviving parents
     2) Surviving siblings
     3) Surviving aunts/uncles
     4) Surviving nieces/nephews
     5) Extended family

Once the hearing is over and any challenges have been addressed, the court will issue the Letters of Testamentary (if there is a will) or Letters of Administration (if there is no will). These letters provide the executor or administrator the official legal authority to act on behalf of the estate. This authority will allow the estate to change title of assets, demand information from institutions, open safety deposit boxes, etc.

2) Report The Inventory Of The Estate

In the initial petition, you must provide a rough estimate of the estate’s assets. Of course, because you didn’t yet have any authority over the estate, you are not expected to know its exact assets and debts. For that reason, the court provides a window of 3 months after the letters of authority are issued to provide an official inventory. If you discover assets after the initial inventory is filed, you will need to amend the inventory to reflect any newly discovered assets.

Note that when there is real estate involved, the court will appoint a probate referee.  The probate referee is a licensed probate court appraiser and will appraise the value of the real estate and its contents.

3) Estate Administration

In most cases California courts will grant you, as the executor or administrator full authority to act on behalf of the estate. Once that authority is granted, you can proceed with administration of the estate unsupervised and will not need to seek additional permission to perform specific tasks.  However, keep in mind that as the representative of the estate, you will be held personally responsible for any actions that do not follow the correct procedures.

But don’t worry! Following the rules is very straightforward.  Simply stick to the required priority of payments:

  1. Estate administration (court fees, admin expenses to manage estate, legal costs, etc.)
  2. Funeral expenses
  3. Taxes
  4. Valid creditor claims
  5. Distributions to heirs

We mentioned “valid creditor claims” in the priority list — wondering what makes a creditor valid?

Valid Creditors are creditors that are known to the estate or that file a creditor claim within four months of the letters of authority being issued. Even if they don’t file a valid claim, some creditors may still be able to collect if they had a lien on a property prior to death.

Please note that while heirs are what most people think of when they think about an estate, they are actually the last priority in terms of payments. The only exception to this is if the court grants special distributions to a surviving spouse and/or children for support (typically only occurs if the children are minors or disabled).

We do not recommend paying any funds to heirs unless specifically authorized by the court or until the four month period for claims is over.   

4) Notifying Heirs of Actions

As we mentioned earlier, most probate cases in California are unsupervised, which means that once you are the executor or administrator, you don’t need court approval to carry out specific actions. However, some actions do require a notification to the heirs.

You don't need their approval, but they do have the right to be notified and potentially contest an action. Regular administrative actions (paying bills, taxes, fees, etc.) do not require any notice, but things like selling real estate and making distributions to heirs will require notice.

5) Reporting To The Court

You will need to report to the court within 12 months of receiving the letters of authority. What you need to report depends on the situation:

If More Time is Required

For many reasons, an executor or administrator may need more than 12 months to complete the probate process. In these cases, you can file a simple status report telling the court why more time is required and how much more time you need. The maximum extension is 12 months. These extensions can continue indefinitely for legitimate reasons — typically the complexity of the. Although an official accounting of the estate is required  (unless waived by the heirs of the estate) only when you are ready to close the estate, we recommend you prepare one for the heirs when requesting an extension.

If Estate Is Ready To Close

To close the estate, you simply petition the court to close the estate and discharge you of the estate responsibilities. In the petition, you tell the court your actions and what distributions have been made to the heirs. If any assets are left in the estate at the closing, you will include an order of distribution that specifies what will happen to the estate balance.

Whenever you provide any distribution to an heir, we highly recommend that you have them sign a receipt and waiver for that distribution.


Final Accounting

California law requires a final accounting of the estate unless it is waived by all the heirs. This accounting summarizes every activity (receipts and payments) the estate has made. Even if the heirs waive the accounting (which is very common), we highly recommend that you keep accurate records so that you would be able to produce an accounting if ever requested to do so in the future.