What is “PROBATE” and what is wrong with it (especially in California)?
Probate is a court-supervised process which administers the estate of a person who has died without a will. This is legally referred to as Intestate Laws. If the owner of assets does not leave a will, the court will have to appoint an individual to manage or administer the estate of the deceased. The person appointed is commonly called either an executor, administrator, or personal representative.
The appointed individual will supervise the disposition and distribution of the estate’s assets and will handle all the liabilities. If the executor is related to the deceased or a private party, the court may require posting of a bond which will be paid out of the estate assets.
The probate process in the Los Angeles Superior Court may take a year or longer if complicated issues exist or if claimants or beneficiaries appear in court with conflicting interests or claims.
Probate process can often become expensive and stressful for the family of the deceased. There are also executor fees and attorney fees that must be approved by the court and paid out of the estate’s assets. Generally, the main problem is that these fees are calculated based on a percentage of the gross value of the estate’s assets, NOT the net value. In other words, fees will be collected from the amount of the debt (including the mortgage debt) and not just on the net value of the assets.
The value of the estate is the total fair market value of the real estate, cash, CDs, stocks, bonds, mutual funds, promissory notes, interests in corporations, LLCs, and other investments, as well as other personal tangible property (jewelry, furniture, automobiles, etc.).
Why is Probate so expensive?
In California, if an individual who owns more than $150,000 in total assets passes on, the following is the total estimated cost of the probate process: