The Volsch Team
When an individual dies, the person likely leaves behind property. Frequently, a last will and testament is also left behind, which indicates how the deceased wanted any property or assets distributed. Consequently, the last will and testament may be subject to probate.
Probate is the process by which the court oversees the administration of the decedent’s last will and testament. When the will is subject to probate, there might be property that must be disposed of pursuant to the sale. This sale is also known as a probate sale.
Sometimes a probate sale is necessary in order for the estate to get money to pay off debts of the decedent, while in other instances, the sale may be done simply to liquidate assets of the estate.
The process involves having a personal representative appointed, such as an executor or administrator. The estate’s personal representative is responsible for settling the claims of creditors, inventorying the estate, paying any taxes that are due, selling the house, administering the house during the probate and then distributing the estate to the appropriate heirs or beneficiaries.
California Probate Code section 10810 sets the maximum statutory fees that attorneys can charge for a probate. Higher fees can be ordered by a court for more complicated cases. The fees are four percent of the first $100,000 of the estate, three percent of the next $100,000, two percent of the next $800,000, one percent of the next $9,000,000, and one-half percent of the next $15,000,000. For estates larger than $25,000,000, the court will determine the fee for the amount that is greater than $25,000,000.
The fees listed below are the California statutory fees used to compensate attorneys and executors in probate cases for various sizes of estates. If both the attorney and the executor receive a fee, the amount paid will be double that shown below. The value of the estate is determined, in general, by the inventory for the estate. (If an accounting of the estate has been waived, the total value of the estate for attorney’s fees purposes is the inventory, plus gains on sales, minus losses on sales.) Debts are not included in determining attorney’s fees, and if a house is appraised at $1,000,000, for example, and it has a mortgage of $800,000, it is still considered a $1,000,000 asset for the purpose of calculating attorney’s fees.
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The fee charged to file a probate petition in the Inland Empire/HighDesert is $435. There will be an additional $435 filing fee when the petition for final distribution is filed. Other fees may apply for the publication of the probate notice, for any certification of copies of court documents, and for the probate referee.
Appraisal of the Estate: Estates are appraised by probate referees, who are appointed by the State Controller to determine the fair market value of the asset. The fair market value includes mortgages and other debts, which can result in an appraisal of the property that is higher than the equity that the deceased owned in the property. Probate referees receive a fee based on .001 percent of the assets that have been appraised.
Fees Can Go Higher:
Probates that are complicated by lawsuits or tax problems, the attorney and executor can ask the judge to approve fees that are higher than those set by state law.
Advantages of Probate:
The proceedings are controlled by a judge, who can decide disputes between heirs or between the heirs and the executor. Creditors are required to submit their claims against the estate within a four-month period, provided they have been notified of the probate. The executor is required, in most cases, to prepare an accounting and report of the executor’s activities.
Disadvantages of Probate:
The cost is usually much higher than would be required for the administration of a living trust for an estate valued at the same amount. It usually takes longer to probate an estate than to administer a trust. Most estates don’t need the supervision of the court unless disputes occur.
The duration of the probate process varies with the size and complexity of the estate, as well as, the difficulty in locating all the beneficiaries. If there is a will and it is contested, or anyone objects to any actions you take as the personal representative, things can really drag out.
The average probate in California – from the date the petition for opening the probate is filed by your attorney to the date that the court orders final distribution of the assets – takes nine months or longer.
I’m certain you’re wondering why so long. In most California counties, it takes 6-8 weeks from the filing of the petition for an estate personal representative to be appointed. Once appointed, the executor or administrator has to give notice to all the creditors and those creditors have four months to file a claim.
After that, the real property needs to be prepared, marketed and sold. Plus, the personal property needs to be addressed. This could take another three to four months, including the notice of proposed action. Handling the real property and the notice to the creditors, can be occurring simultaneously.
Finally, after the property has been sold a petition for distribution at the end of the probate also requires six to eight weeks before an actual order of distribution is signed by the court.
Trust sales are different from probate sales because court approval is usually not necessary. But, there may be a legal requirement to give notice to certain interested individuals.
In most cases, a trust sale is very similar to a standard sale, but the trustee is exempt from certain documentation or paperwork needed in a standard real estate transaction.
The trustee must manage the trust estate solely for the benefit of the beneficiaries. The trustee must also keep the beneficiaries of the trust reasonably informed of the administration and has the duty to take reasonable steps to control and preserve the trust property and make it productive.
The personal representative, also referred to as the Executor (if there is a will) or administrator (if there is not a will) is appointed as part of the probate proceeding and has the responsibility of managing the estate through the proceeding, subject to established probate rules and procedures.
The executor is nominated in the will. If there is no will, or all the executors who are nominated have died or are unwilling to serve as the executor, state law provides that the decedent’s closest relatives have the highest priority to become administrator of the estate.
Keep in mind that the probate court has a considerably amount of control over the activities of the personal representative and requires that she or he obtain prior permission of the court before performing certain actions such as the sale of the real estate owned by the estate.
When the decedent leaves a will, an “Executor” is responsible to carry out the directions and requests set forth in that will. Conversely, when a decedent dies “intestate” (i.e., the person passed away without leaving a will), the California Probate Court appoints an “Administrator” to manage the decedent’s estate.
My team and I have a system to handle the transactional details. Just as important, we keep you informed, all along the way. The number one complaint people have with real estate professionals is lack of communication. I have set up a system that keeps my clients up-to-date with the team’s efforts. You can expect to receive, at a minimum, a weekly update. If we have sometime important to share with you, we will call or email you promptly.
On the other hand, if you have a question or concern, or just want to speak with me, simply call (760-912-8905) or email me (email@example.com). I’m here to answer all your questions and address any of your concerns. I want you to feel comfortable throughout our transaction.
There are three main options to liquidate the remaining personal property. Keeping in mind that as the Inland Empire administrator or executor to act prudently and maintain a fiduciary duty to earn as much as possible for all the heirs or beneficiaries of the Inland Empire probate or trust. Experience shows that one of these options will work best for your situation.
- Option 1: Donation
- Option 2: Estate Sale
- Option 3: Buy Out