Probate Services.

Probate is not required for every asset a person owns at death. It is generally used for assets held in the decedent's name alone, the decedent's half of community property held with a spouse, the decedent's share of property held as a tenant in common, and unregistered personal property such as jewelry, art, and furniture.

Some assets pass outside probate entirely: property held in joint tenancy or in a living trust; accounts and policies with a named beneficiary, such as IRAs and life insurance; payable-on-death and transfer-on-death accounts; community property with right of survivorship; and assets passing to a surviving spouse.

If the total value of the probate assets falls below California's small-estate threshold, a simplified transfer procedure is available and full probate is not necessary.

California offers a simplified process — a spousal property petition, sometimes called a spousal confirmation hearing — for assets passing to a surviving spouse. A petition is filed, notice goes to interested parties, and the court confirms the assets to the surviving spouse unless someone objects. Only spouses can use this process.

It saves both the fees and the time of full probate: a spousal confirmation typically resolves in roughly 60 to 90 days, compared with the nine to twelve months a full probate often takes.

One of the first questions after a death is whether probate is needed at all. If every asset is held in a living trust or joint tenancy, it usually is not. If the decedent held assets in their own name above the small-estate threshold and there is no surviving spouse, a probate proceeding will be required — and an executor or administrator must be named.

When there is a will, it usually names someone for the role; that person need not be a California or U.S. resident, and may be an individual, a group such as the decedent's children, or a bank or trust company. No one is forced to serve and may decline. When there is no will, the nearest relatives have the first right to serve or to nominate someone. A person named in a will is the executor; a person appointed by the court is the administrator; and where a will exists but names no available executor, the court appoints an administrator with the will annexed. The titles differ, but the duties are the same.

Probate begins by filing a petition in the superior court of the county where the decedent lived. The court sets a hearing roughly 30 days out. In an emergency — for example, when the decedent was the only person who could sign for a business account — a special administrator can be appointed within about 24 hours to act before the hearing.

Once the petition is filed, notice of the hearing must be published in a local newspaper and mailed to everyone named in the will, all heirs at law, and any alternate executors. The will may be self-proving if it contains the right witness language; if not, a witness statement is needed, and alternative methods exist if no witness can be found. Unless the will waives it, the executor or administrator must post a surety bond — an insurance policy protecting the estate against improper conduct, with the premium typically paid from the estate.

If there are no objections, the court admits the will to probate and appoints the executor or administrator, who then files letters testamentary or letters of administration. Certified copies of those letters prove the person's authority when estate assets are later transferred.

Soon after appointment, the executor or administrator must take possession of all assets subject to probate — not assets in joint tenancy, a living trust, or those passing by beneficiary designation. Title on collected assets is changed into the name of the executor or administrator: stocks, bonds, mutual funds, brokerage accounts, bank and credit union accounts, and physical assets such as real property, vehicles, boats, and planes.

Once collected, the assets must be inventoried. The court assigns a California Probate Referee, who determines the fair-market value of the estate's non-cash assets as of the date of death for a statutory fee of one-tenth of one percent (0.1%) of the appraised value — for example, $300 on a $300,000 home, regardless of any mortgage. The appraisal is due within four months of appointment, and a procedure exists to contest the referee's valuation.

Once the executor or administrator has access to estate funds, ordinary bills — utilities, credit cards, funeral expenses — can be paid without special formality. Anyone with a claim against the estate can file a creditor's claim form, which the creditor completes and the executor or administrator approves or rejects.

Claims generally must be submitted within four months of appointment; a creditor who was unaware of the death may petition the court up to a year out. If a claim is rejected, the creditor has three months to sue before losing the right, and only if a claim was filed first. In most estates there are no contested creditor claims when the routine bills are simply paid.

Some or all estate assets may need to be sold — to pay estate taxes or debts, or because an asset such as a vacant home is not wanted by the heirs. There are two routes. Under court approval, the executor or administrator must obtain the court's approval before a sale; a court order is required to sell stocks or bonds, and a court hearing is required to sell real estate, during which anyone may bid the price up. Under the Independent Administration of Estates Act, the executor or administrator may sell an asset after giving 15 days' written notice to any affected beneficiary — if no one objects, the sale proceeds; if someone objects, court approval is required.

The executor or administrator usually prepares a budget after appointment, estimating federal estate taxes, attorney and executor fees, administrative costs, debts and claims, and any cash bequests. If there is not enough cash to cover these, decisions must be made about which assets to sell. A home headed for sale is often better marketed within about 30 days of appointment than left vacant for months.

The executor or administrator is responsible for seeing that all federal and California taxes are paid. They are not usually personally liable — but the probate assets are, and if assets are distributed and the IRS or Franchise Tax Board later assesses a deficiency, the executor or administrator becomes liable up to the value of what was distributed.

A federal estate tax return is required only when the estate exceeds the federal estate tax exemption, and is due within nine months of death; a six-month filing extension is available, but any tax owed is still due at nine months. Amounts left to a qualified charity or to a U.S.-citizen spouse are exempt, and debts, funeral expenses, and legal fees are deductible. Because asset values are tied to the date of death, whoever prepares the returns should begin gathering information as soon as possible. Late filing or payment can carry substantial penalties and interest.

A final income tax return is still required for someone who has died. It covers income received and deductions paid from January 1 through the date of death and is generally due the following April 15. Income such as dividends or interest received after death is reported instead on the estate income tax return — or by a surviving joint tenant, if the asset was held in joint tenancy.

Only medical expenses paid on the decedent's behalf within a year of death are deductible on the final return; other deductions must have been paid before death. It is worth reviewing estimated tax payments for the year of death, since payments may need to continue, and retaining the prior several years' returns so no income or deduction is overlooked. If the decedent died early in the year, confirm the prior year's return was filed — an extension can usually be obtained if not.

Income generated by estate assets after the date of death is not reported on the decedent's personal return. Interest, dividends, and other income paid to the estate go on a fiduciary (estate) income tax return, which uses the estate's own tax identification number rather than the decedent's Social Security number.

A fiduciary return is filed annually for the estate, reporting income such as interest, dividends, capital gains, and net rents, with deductions for items like mortgage interest and legal and executor fees. Unlike a personal return, it need not follow the calendar year — the estate may choose any month-end as its fiscal year-end, with returns then due three and a half months later. If the estate is still open at year-end, it pays tax on net income; if it was fully distributed during the year, the beneficiaries pay tax on their proportionate shares. Fiduciary returns continue until the estate is closed, and an estate open more than two tax years must pay estimated fiduciary tax.

Depending on the estate's assets, other taxes may apply. California property tax on real property in the estate is due on its normal schedule; real property in another state or country may require a separate return and tax; and a business in the estate that sells products may owe sales tax. A gift tax return may be due if the decedent made a gift above the annual gift tax exclusion in the year of death.

Because the executor or administrator is liable for taxes later found due on already-distributed assets, they often hold back a reserve of estate funds — typically for two to three years — against that possibility before final distribution. The IRS generally has three years to assess additional tax (measured from the later of the due date or filing date) and California four years; underpayments over 25% extend those periods, and no return or fraud removes the time limit entirely.

Before the estate can be distributed and closed, all assets must be inventoried, the creditor-claim period must have expired with claims resolved, any assets to be sold must be sold, and all tax returns filed and taxes paid.

The court must then be petitioned for an order authorizing the final distribution. The executor or administrator either files a full accounting of every receipt and disbursement or obtains a waiver of accounting from all beneficiaries. A petition then summarizes the estate, its administration, the assets on hand and their planned distribution, and the fees payable to the executor or administrator and the attorney. If the petition is in order and unopposed, the court orders the assets distributed and the fees paid; receipts from each recipient are filed with the court. A relatively simple estate with no federal estate tax can often close in nine to eighteen months, though an estate owing estate tax may take a year or two longer.