Probate and Trust Administration Frequently Asked Questions

Probate Administration

The costs of probate are set by state law. These costs may include appraisal costs and costs for an insurance policy known as a “surety bond,” as well as executor’s fees, court filing fees, certified copies fees, and legal and accounting fees. Probate costs are roughly between 4% to 7% of the total value of the estate, if not more. For instance, if someone contests a will then thousands of dollars can be spent litigating the matter. California law allows both a Personal Representative and the attorney for that Personal Representative to receive compensation (referred to as a “statutory fee”) for ordinary services, calculated at a percentage of the appraised value of the estate property. The formula for calculating the fee (as to the each, the representative and the attorney) is as follows:
  • 4% of the first one hundred thousand dollars ($100,000), plus
  • 3% of the next one hundred thousand dollars ($100,000), plus
  • 2% of the next eight hundred thousand dollars ($800,000), plus
  • 1% of the next nine million dollars ($9,000,000), plus
  • ½ of 1% of the next fifteen million dollars ($15,000,000).
For all amounts above twenty-five million dollars ($25,000,000), a reasonable amount to be determined by the court. See Probate Code Section 10810 for more information. Moreover, it is important to note that additional compensation (known as an “extraordinary fee”), may also be paid to the Personal Representative and/or attorney for that representative for “extraordinary services” in the amount determined by the court. As such, the probate process can be quite costly. See Probate Code Section 10811. NOTE: Mortgages or other debt obligations are not considered in computing the fee base. Moreover, the fee based to calculate this statutory fee can also include income received during the administration process, plus gains over the appraised value on assets sold during administration. Thus, even if the estate has a $200,000 debt and the estate is only worth $300,000, the statutory fee is calculated out of the full $300,000.

No. Not all assets are subject to the authority of the probate court. Below are some examples of assets that me not be subject to probate court:

  • Assets below a certain amount may be transferred through a Small Estate Affidavit while some other assets may qualify to be transferred via a Spousal Property Petition. (See California’s “simplified procedures”).
  • IRA’s, Keoghs, and 401(k) accounts as well as life insurance benefits can be transferred automatically as long as the persons are named as beneficiaries.
  • Bank accounts that are set up as pay-on-death accounts (PODs) or “in trust for” accounts (a “Totten Trust”) with a named beneficiary also pass to the beneficiary without probate.

Property held in Joint Tenancy may pass to the surviving joint tenant(s) without probate.

  1. Joint Tenancy

Joint tenancy is a legal arrangement that allows two or more parties to jointly own an estate/property at once. When one of the parties dies, their property share automatically passes to the other parties without the need for probate. The joint tenancy is often established through the property’s deed.

  1. Small Estate Affidavit

When an estate is worth less than $166,250, the executor may be able to distribute the estate’s property directly to the beneficiaries without going through probate. The process involves the submission of an affidavit prior to the beginning of probate and a 40-day waiting period after the decedent’s death to distribute the assets.

Below is a list of some the decedent’s property that is not included in the $166,250 limit:

  • Real estate outside of California
  • Joint tenancy property
  • Property that goes to a surviving spouse
  • Multiple-party accounts
  • Payable-on-death accounts
  • Property held in trust

When the real property is worth less than $55,425, the beneficiary may be able to file an affidavit to avoid probate and allow transfer of the property to them. This process involved a 6-month waiting period.

  1. Spousal / Domestic Partner Property Petition

A spousal property petition allows the transfer of property to a surviving spouse with a single court hearing as opposed to a full probate proceeding.  There is no estate value limit on a spousal property petition. The surviving spouse / domestic partner or conservator/representative of the surviving spouse’s / domestic partner’s  estate can file the petition and notice of the hearing must be provided to other heirs of the decedent or those who have an interest in said property.

  1. Life Insurance / Retirement Benefits / Pensions, etc.

Life insurance policies usually allow beneficiaries to directly acquire their payouts without going through the probate court.

A person with a retirement account such as a pension, IRA, 401(k), or 403(b) may be able to directly pass the benefits directly to their beneficiaries without going through probate court.

California law states that a Personal Representative must complete probate within one year from the date of appointment, unless he/she files a federal estate tax. In this case, the Personal Representative can have 18 months to complete probate. If probate has not been completed by that time, the Personal Representative must file a status report with the court to explain what is still outstanding and how much time it will take to complete. 

If the Personal Representative does not report to the court, the beneficiaries may ask the court to order them to file an accounting or take other actions to close probate. The court may then take the steps to remove the Personal Representative and appoint someone else. 

NOTE: While matters must be completed within 12 or 18 months, there may be circumstances that can make the probate process last a lot longer. These circumstances may include a will contest (a claimed filed with the court that all or part of the will is invalid), inability to locate beneficiaries, a sizeable and complex estate, among others.

In circumstances where there is a Will, the individual who is named as the Executor will usually be the one who oversees the probate process and will be appointed to serve as the Personal Representative of the estate. This person will be responsible for managing the estate through the probate process, which may include but is not limited to, following the courts instructions, procedures and Rules of Court. Please note that an executor may not act as a Personal Representative until they are appointed by the court and formal Testamentary Letters are issued giving them the authority.  

If a Will does not exist, or no executor is named in the Will or the executor named in the Will does not want to serve as the executor, the probate court will appoint an individual to handle the probate process. This person will be known as the “administrator.” In these instances, the Court will usually choose the closest living relative, or a person who will inherit some portion of the decedent’s estate. 

The Personal Representative / Administrator oversees the filing of the initial probate petition and is supposed to take every step necessary to settle the decedent’s estate. This will include following court orders, paying debts, filing and paying taxes, arraigning for the inventorying and appraisal of the estate, distributing the estate to the heirs, and the hiring third-parties (attorneys, accountants, appraisers etc.) necessary to carry out certain duties, among others (See Probate Checklist).

While the court is not in charge of “supervising” the personal representative / administrator, the representative/administrator cannot take certain steps in the administration of the estate without the Courts approval.  the Court does requires that they ask the Court’s permission to sell real estate or business interests owned by the estate, among others.

The personal representative cannot do any of the following things without the Court’s permission:

  • Sell real estate and/or a business interest own by the estate
  • Pay fees to themselves
  • Pay fees to their attorney
  • Make a preliminary distribution of property to beneficiaries (with a few exceptions), or
  • close the estate.

Yes. In addition to your out-of-pocket expenses to manage and settle the estate, personal representatives / administrators usually earn a statutory fee of the probate estate (See “What are the costs of Probate?”) link to question above.

The court may lower or deny compensation as well as replace the Personal Representative / Administrator with someone else. In addition, a Personal Representative / Administrator who fails to perform their duties may also have to pay for damages caused to the estate. A personal Representative / Administrator may be held liable for the following:
  • Improperly managing the assets of the estate,
  • Failing to collect claims and money due the estate,
  • Overpaying and/or not paying creditors,
  • Selling an asset without the authority to do so, or at an improper rate,
  • Not filing tax returns on time
  • Distributing property to the wrong beneficiaries, or
  • Distributing property to beneficiaries before all creditors have been paid, etc.
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Contact us today for a consultation and find out how we can help.

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Trust Administration

A trust administration can be closed within 6 months. Trusts that involve property distribution or liquidation can be more complicated and take up to a year or longer to settle.

A revocable living trust can protect your assets from Medi-Cal for those assets that are properly titled in the name of the trust. In June 27, 2016, Governor Brown signed legislation SB 833 which greatly reduced the scope of California’s Medi-Cal Estate Recovery against the estate of deceased Medi-Cal beneficiaries who died on or after January 1, 2017. This legislation limited Medi-Cal recovery to only those estate assets subject to California probate that were owned by the decedent at the time of their death. (See Change to Estate Recovery effective January 1, 2017 due to Legislation SB 833). 

Another issue that can impede the trust administration process is when the successor trustee has also died and there are no other persons or entities nominated in the trust to serve as a successor trustee. In these cases, it will be necessary to go to court to appoint a new successor trustee.

Contact us today for a consultation and find out how we can help with your probate and trust administration needs: 
626-600-8644