How Probate Works

When someone passes away, they leave an estate consisting of that individual’s assets and debts. In most cases, decedents leave a will and are considered testate; otherwise, they are considered to have died intestate and their assets pass by that state’s laws of intestacy.

By leaving a will, which dictates how you wish your assets to be distributed, or trust instruments that contain your property, you may avoid the probate process but not necessarily. The probate process is a judicial procedure that determines the validity of your will, its interpretation and the management and distribution of your assets and the payment of your debts.

Probate is administered by special probate courts in each state. No probate is administered in federal courts. Probate assets are those that you owned alone. Non-probate assets include funds administered by a life insurance policy or which pass to a beneficiary through a trust. Personal property can be probated in the state where you live while real property can only be probated in the state where it is located.

Personal Representative

Your will should designate your personal representative along with an alternative individual to handle your estate. If no one was named or your representative did not survive your death, the court will appoint someone. In either event, the personal representative is given Letters of Administration or Letters Testamentary that authorizes that person to so act after being sworn.

A document called a Petition for Probate of Will and Appointment of Personal Representative is filed, or some form very similar to this, and the process is initiated.

Notification of Creditors

Depending on the laws of your state, a death notice is published by either your personal representative or the court giving the public notice of the probate of your estate and to allow creditors to file claims or for others who feel they have an interest in the estate.

Property Inventory

One of the main duties of the personal representative is to inventory the real and personal property of your estate to determine value. This determines if there is sufficient value to meet valid creditor claims and those of the estate’s beneficiaries. Generally, you will have, or will want to have, a list of your assets contained either in your will or made accessible to your personal representative after your death.

Distribution of the Estate

The final and most important step is the distribution of your estate to your beneficiaries, or heirs, and to any creditors. Before the heirs receive their share, the administration costs including publication and appraisal fees are paid followed by funeral expenses, taxes, and then to remaining claims. If attorneys are used, their fees must be reasonable or based on the state’s fee schedule. Your personal representative is also paid a small percentage subject to court approval.

Summary Probate Procedures

For smaller estates, most states have abbreviated procedures that often do not involve any court appearances and can distribute your estate more expeditiously.

Avoiding probate and the costs and time involved should be your goal. Talk to an estate planning attorney when preparing or updating your will about how your assets can be more easily left to your heirs and others without diminishing their value from taxes and the costs of probate.

Glossary of Key Probate Terms

• Agent. This is a person who acts on your behalf with regard to medical and financial decisions should you become unable to do so. An agent is one who has a durable power of attorney.
• Advanced Health Care Directive. This document names the agent who will act on your behalf if you can no longer do so. It also relays information such as life support decisions, resuscitation instructions, and other end stage questions. An advanced health care directive should be included in your medical record.
• Beneficiary. This is the person or group who receives any or all of the benefits of your estate. You name a beneficiary when you plan your will.
• Decedent. A person who has created a will or other testamentary device who has now died.
• Estate plan. An estate plan refers to all of the documents and decisions that go into what should happen to your property and to you should you die or become unable to handle your own financial or health decisions.
• Executor. The person you name to execute all conditions of your estate and terms of the will. This person will administer the estate. When you file a last will and testament, the probate court names the executor. Even with a named executor, the court has final say regarding who can be the executor.
• Fiduciary. This is the person named to be in charge someone else’s assets. He or she must administer the estate without regard to his or her own betterment.
• Living trust. This is a document, similar to a will, that dictates how you want your assets dispersed. A will, however, only becomes effective after death. With a living trust, your family can avoid the costly process of probate.
• Probate. A probate court enacts the probate process which will determine how and to whom your assets are distributed. All disputes regarding the will are resolved here, including questions of undue influence, forgery, proper identification of assets and beneficiaries, and so on. Probate can be costly and time-consuming, and there are numerous instruments a person can use to distribute assets outside of probate.

Assets Not Subject to Probate

The decedent may also have substantial assets that need not be probated. If the decedent had a Revocable Living Trust with assets funded into it, then any asset owned by the trust will automatically pass by law under the terms of the trust without the need for probate intervention.

Life insurance provides an easy method of providing much needed income and for paying off debts. These proceeds also pass automatically to the designated beneficiaries of the insurance policy without the need for probate.

Retirement accounts such as IRAs, annuities, and 401(k) accounts do not need to be submitted to probate. If there are remaining funds in these accounts at the time of the decedent’s death, then they will pass by operation of state law to the designated beneficiaries. If no beneficiaries survived, then the proceeds would become an asset that required probate.

One other account that has funds that may escape probate are ones that have a Payable on Death designation, or Totten Trust as some states have named this practice. Any bank account can have this designation so that a named beneficiary need only provide proof of the account holder’s death for the funds to transfer. Unlike a trust, however, the holder cannot set up alternate beneficiaries on one account. This can be avoided by setting up multiple Payable on Death accounts for different heirs. You should check with your bank regarding the state requirements and restrictions for these accounts.

When an Estate Can Avoid Probate

First off, if there is less than $150,000 in an estate, then it will not go to probate court. Obviously, the vast majority of us have no idea when we are going to pass, much less how much property will be in our estate at that time or its valuation, so this is not a good planning strategy for avoiding probate.

Second, if there is a surviving spouse, then it is possible in some cases that an estate may not go into probate. In California, a person’s community property automatically transfers to his or her surviving spouse. Separate property is another story, however. If there is no will and no children, then that separate property may also pass to the spouse.

Finally, there are a number of estate planning instruments which can be used to pass property outside of probate. These include living trusts, testamentary trusts, life insurance policies, and property held in joint title. Proper utilization of these instruments can result in property transferring automatically to another party. If all property passes through such instruments, probate will not be necessary, and, at the very least, the amount of property that does go to probate can be minimized in order to simplify the probate process.

An estate planning professional can provide further guidance on how you can take steps now to avoid the probate process in the future and preserve assets for your loved ones.

What is Undue Influence?

This happens far too often in real life, and it calls into question whether the changed will is the product of what we call “undue influence,” and therefore invalid. So what happens if the will entered into probate court differs radically from your understanding of as to the intentions of the deceased, with regard to “who gets what?” Imagine your father promises all of his estate to you and your sister. But when the will is entered into probate, Instead of the property being given to your sister as expected, the father, in his last months, willed it to a nurse or caregiver, or to just another one of your siblings.

What recourse do you have? The first consideration is that it is possible that the testator’s free will may have been manipulated. The elderly, ill or infirm may suffer from some degree of cognitive impairment, making them easy targets for the unscrupulous. This is undue influence.

Under California law, a testator is required to have “testamentary intent” in creating a will for the will to be considered valid. Testamentary intent means the testator actually intended for the will to dispose of his or her estate. But if a petitioner can prove that the testator was unduly influenced in creating the will, this will disprove testamentary intent for some or all of the will, and therefore make some or all of the will invalid.

Establishing the Presence of Undue Influence Factors in a California Will

Successfully establishing the facts of undue influence can mean that all or part of a will can be deemed invalid, and an earlier will, if there is one, reinstated. Establishing that undue influence led to a change in a will can be an enormous challenge, as it occurs after the death of the person. The deceased is no longer here, able to corroborate either side’s position. A decision will largely depend on circumstantial evidence.

The California Supreme Court has listed five criteria that can be used to establish the presence of undue influence, although these are neither mandatory nor exclusive, and not all points must be present for a successful will impeachment:

• The provisions of the will were “unnatural.”
• The dispositions of the will contradict the intentions of the testator, expressed both before and after the execution of the will.
• There was a close relationship between the disputed beneficiary and the testator affording the beneficiary the opportunity to control the creation of the will provisions.
• The testator’s mental and physical condition was compromised such that their freedom of will could be taken advantage of in order to change the will.
• The person accused of exerting undue influence was active in procuring the will.

Undue influence can include several types of behavior, including:

• Poisoning family relationships;
• Over-medication of the testator;]
• Acting to isolate the individual from other loved ones;
• A high level of dependency, both physical and emotional which makes the person more vulnerable.

Litigating Undue Influence in Probate Court

Once such evidence of undue influence is admitted into probate, the court may also hear evidence of the proponent of the will indicating that the will or its specific sessions were not the result of undue influence. If the probate court determines that undue influence affected the creation of the will, the court may either invalidate the entire will or specific portions.