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What Are Some Common Misconceptions About Probate?

One common misconception is that if the person has a will, probate is not required. Only if someone has a trust, the assets in the trust don’t have to go through probate.

Another misconception is that probate fees will eat up a significant portion of the estate. According to this misconception, at the end of the probate process, not much will be left over for the heirs. In fact, the example above of a $500,000 estate, the attorney’s fees will be $13,000, which is only 2.6 percent of the estate’s value.

Another misconception is that a person doesn’t need an attorney to do a probate. He certainly isn’t required to hire one by law. However, in practical terms, an attorney is essential because the procedural requirements for probates are complex. The courts have very little discretion in terms of allowing somebody to proceed if he’s in violation of the notice or other requirements and the consequences of non-compliance can be significant or at least time consuming and frustrating.

Know that all probate petitions and probate proceedings are reviewed by a court appointed attorney whose duty it is to make sure the people managing the probate are in full compliance with the various legal and notice requirements.

Another common misconception is that probate takes less time than it typically does. People expect the probate process to be completed in 2 or 3 months, whereas it always lasts at least 9 to 12 months.

People also have the misconception that only a single probate is required in the state where the person died, even if the decedent owned property in another states. In fact, such a situation requires an ancillary probate. One state does not have jurisdiction to affect real estate in another state. Therefore, an ancillary probate must be done in the state where the property is located.

Another misconception is that the courts are able to correct any unfairness one heir perceives in a will. Even if a decedent gives more of his estate to one of his children then the others for whatever reason, it is the court’s obligation to enforce the terms of the will as written so long as it is a valid will.

The fact that the will is perceived as unfair, or that the decedent drafted it that way for bad or improper reasons, does not make any difference. Courts are not authorized to revise a decedent’s will as long as the decedent executed a valid will in the first place.

Another misconception is that if someone has a trust, without all the assets owned by the trust, probate can be avoided. This is not the case, unless the personal representative can establish that the decedent intended to put those assets into the trust but failed to get around to it.

For instance, perhaps the person listed a bank account as a trust asset on a schedule when he signed the trust, but then failed to formally go to the bank to transfer the account to the trust. In that situation, the personal representative can seek a court order that the account be deemed owned by the trust, thus avoiding probate.

Do Beneficiaries Need To Pay Estate Creditors Out Of Pocket If They Aren’t Paid Through The Probate?

Before any distribution to heirs, the estate needs to pay the creditors.

However, California law provides that if for some reason, heirs receive distributions from estates in a situation in which a validly filed creditor’s claim has gone unpaid, the beneficiaries can be liable for that claim up to the amount that he or she receives from the estate.

Therefore, if an estate is worth $200,000 and a creditor files a valid claim for $10,000 but doesn’t get paid, and the four heirs are each distributed $50,000, then that creditor can pursue those beneficiaries up to the total amount of $50,000.

These situations are unusual, particularly if the estate is properly handled with the assistance of an attorney. After all, the attorney’s task is to identify and make sure that all known creditors are paid before any distribution occurs.

How Are Taxes Taken Care of in a Probate?

An estate is subject to income taxes for income received during the period of administration.

It is also the personal representative’s duty to ensure that a final tax return for the decedent is filed for his or her final tax year. No inheritance tax exists in California, and the federal “exclusion amount,” or the amount an individual can own without paying federal state tax, has been increased, as well.

During 2015, the amount of the federal estate tax exclusion is $5,430,000 per person, which statistically covers only about 2 percent of all estates of people who die. Federal estate taxes do not come into play in the typical probate estate.

Typically, the only tax consideration is the decedent’s final income tax return and the return for tax on income received by the estate during the period of administration. If an estate owns real estate during the period of administration, it must also pay property taxes.

How Do I Know I Have The Right Attorney For The Job? Should I Base My Decision on How Much He Charges?

You cannot base such a determination on how much the attorney charges because probate fees are statutory.

Although probate fees can be negotiated, most attorneys will not negotiate because the statutory fee is a fair reflection of the amount of work involved in handling a probate.

In my experience, it is very unusual for clients to negotiate probate fees, or for the attorney to agree to a reduced fee in a probate. Legally, however, there is nothing that says an attorney cannot agree to a reduced fee in the proper circumstances.

Initially, a person should look at the lawyer’s website to see how much of the practice is devoted to probate and estate planning work. A person should further note how long he or she has been in practice and whether he or she is a certified estate planning specialist. He should also look at the testimonials on the website from clients regarding probate proceedings, as well.

A person can look at Martindale-Hubbell to see what the attorney’s rating is. A person should select an attorney who is AV or BV rated in Martindale-Hubbell.

A person can also look on the state bar’s website to see if the particular attorney has had any disciplinary proceedings filed against him.

A person can also receive referrals from people who have used the attorneys. A referral from a client or from a former client who is satisfied with the attorney’s services can be very valuable.

Also, call the attorney and talk to him. Question him about his probate experience, style of practice, background, training, and continuing education. At the first meeting, the client must decide whether he or she fits well with that attorney and whether the attorney has a personality that the person thinks will be easy to work with.

Referrals, reviewing the state bar’s website for disciplinary proceedings, and looking at testimonials are all good ways to select an attorney. A person can sense very quickly when talking to an attorney how literate he is in probate matters.

The court does not maintain a registry of probate attorneys. Therefore, a person cannot call a judge and ask who he or she should use for a probate, unless the judge is a personal friend. However, most judges will not give referrals.

For more information on Common Misconceptions Regarding Probate, a free initial consultation is your next best step. Get the information and legal answers you’re seeking by calling (916) 635-0302 today.

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