What is Probate?

by Ria Nambiar

In the estate planning field, the term “probate” is often spoken with dread. We think of it as something we want to avoid at all costs, but what exactly is probate? And why do we try to avoid it?

Probate is a court-driven process that works to distribute one’s assets according to either their will (if one exists) or state law (if no will exists). The probate process deals with a variety of issues such as finding whether or not a valid will exists, determining who the beneficiaries are, estimating the deceased’s property value, taking care of the deceased’s financial liabilities, and finally transferring property to the ownership of the beneficiaries. Probate is a likely reality for those whose assets are valued at above $166,250 (the probate threshold as of the time of this writing in 2021) and who do not have a customized and comprehensive trust. Although the length and nature of the process depends on the state one resided in at the time of passing, California’s probate process typically takes 9 to 18 months. In some cases it can take even longer given that one must get on the judge’s calendar and the probate examiner must take inventory of all assets. During this lengthy process, all assets are frozen and unobtainable for the beneficiaries.

There are countless reasons one might hope to avoid the probate process. For one, the sheer length of the process causes time delays for those who are meant to receive the assets since they are frozen for the duration of probate. Another reason to avoid probate is to maintain privacy. Everything relating to the transfer of property during probate becomes public knowledge, so if one hopes to maintain privacy, they would work to avoid this process. Additionally, probate gives a judge an extensive amount of control over how the deceased’s wishes are carried out. For example, if a will is not in existence, the judge would be the one to choose who manages finances for the deceased’s children if they are minors and then the children obtain full control and ownershio at the age of 18. This can be disastrous if the child receives income-based government benefits. These choices of who can manage one’s affairs are very personal, so one may not want such decisions to be made by a judge. Last but not least, one may want to avoid probate simply due to the unnecessary fees that must be paid throughout the process. Both the executor and attorney fees (if one chooses to hire an attorney) can add up to be significant, so it is not unreasonable to seek to avoid such fees.

The probate process is typically started by the executor named, or, if there are none, a court-appointed administrator begins by filing a petition for probate. As this petition is filed, a notice is published to the public and to the beneficiaries. The executor then must gather all of the assets. This consists of taking inventory and valuing all the assets which may require an appraisal. Then, the executor must apply for an estate taxpayer ID and open an estate bank account. Throughout this process, it is the executor’s job to keep all the assets safe and pay off any bills or taxes. Once this is completed, the executor will ask the court to close the estate, and all the assets are distributed to the beneficiaries.

Overall, probate is a lengthy, expensive, and meticulous process that can be easily avoided with the right planning that typically includes a trust, in addition to a will.