The short answer: Probate is the court-supervised process by which a deceased person’s assets are used to pay outstanding debts and then distributed to relatives. But that doesn’t really tell you much. In Placer County, Sacramento County, and El Dorado County, where I do most of my work, the Probate process takes well over a year and several court appearances. During that period, there is a lot of work to be done to prepare for distribution of the estate. In today’s blog, I’ll walk you through a simple Probate I recently completed so you have an idea of what this process looks like. As always, the information in this blog is general in nature and is not intended as legal advice. I strongly recommend you contact and work with an attorney whenever a court appearance is required and particularly when Probating a loved one’s estate. Also, I have changed the names of the people involved and the dates to protect client confidentiality.
The Initial Consultation
At Shiells & Hammer we always offer a free consultation. This takes pressure off the initial meeting so our clients can get to know us better. We spend anywhere from 30 minutes to 2 hours reviewing the case to make sure we are a good fit. For Probates, the initial meeting is focused on determining whether a Probate is required. Because of the time and expense involved, our clients generally prefer to avoid Probate whenever possible.
I met with Jane Smith in July of 2019. She explained her mother, Janet Smith, passed away on April 1, 2019. Janet’s husband, Jack, had died many years ago and Janet never remarried. Janet had two children, Jane and John.
Janet had only two meaningful assets: (1) her home in Roseville and (2) a checking account at Wells Fargo Bank. Jane estimated the home to be worth $450,000 and the bank account to hold $50,000. Janet died without any estate planning documents. More specifically, she did not have a will or a trust.
In California, Probate is required for estates holding real property with a gross fair market value greater than $55,425. (Prob. Code § 13200.) Gross fair market value is the sum of the values of all real properties in the estate without accounting for any debts or expenses related to those properties. In this case, Janet’s home easily exceeded the $55,425 threshold for Probate.
At the end of our initial consultation, we always provide a quote or estimate for our services. Whenever possible, we provide a fixed fee quote. In our experience, charging a client hourly for every e-mail, phone call, and meeting stifles communication. We prefer to have a more open dialogue with our clients. In California, the fee an attorney may be paid in a Probate is set by statute and determined by the value of the estate.
Based on the information provided by Jane, I estimated the value of the estate to be $500,000. The statutory attorney fee for a $500,000 estate is $13,000. (Prob. Code § 10810.) In addition, Jane would also receive a matching fee of $13,000 for serving as administrator of her mother’s estate.
Jane and I agreed to work together and scheduled a follow-up meeting for two weeks later.
Petition for Probate
In Probate cases I schedule the follow-up meeting two weeks later, so I have time to prepare the Petition for Probate and supporting documents. A petition is a request made to a judge. A Petition for Probate is a request to begin Probate proceedings. Like many of the documents submitted to the court during a Probate, the Petition for Probate is a fill-in form created by the Judicial Council of California. The questions on the form are technical and can be difficult for someone without legal training to answer. Failing to answer these questions correctly can result in significant delays and other issues. If you need to file a Petition for Probate, you should seek the assistance of a qualified attorney with experience in Probate matters.
At the follow-up meeting with Jane, we carefully reviewed the Petition for Probate and supporting documents for errors. Once we confirmed everything, she signed the documents. By signing the documents, Jane swore, under penalty of perjury, that the statements made in the documents were true. I then asked Jane to write a check for $435 to the Superior Court. This is the current fee for filing a Petition for Probate.
On July 30, I filed the Petition for Probate in Placer County Superior Court. Our hearing was set for October 18, 2019, two and one-half months after we filed the Petition for Probate.
In my experience, this waiting period is typical for Placer County, Sacramento County, and El Dorado County, give or take a couple weeks. However, it’s important to note that external events can result in delays as the timing is based largely on the court’s schedule.
Hearing on Petition for Probate
Before the hearing on a Petition for Probate, there are several additional documents which must be prepared and submitted to the court. Some of these documents have very specific deadlines. For example, Publication of Notice requires notice of the hearing to be published in a local newspaper a certain number of times before the hearing. The newspaper then submits a Proof of Publication to the court confirming this obligation has been satisfied. Working with an attorney familiar with this process will ensure that these obligations are properly and timely satisfied.
In this case, Jane and I were able to successfully submit everything before our October 18, 2019 hearing. A few days before the hearing, the Court posted Probate Notes confirming the Petition for Probate would be approved. On October 18, 2019, I appeared before the judge and confirmed approval of the Petition for Probate. Before leaving the courthouse, I obtained certified copies of the Order for Probate and Letters of Administration.
The Order for Probate formally grants the request to begin probate proceedings – the Petition for Probate. Letters of Administration, sometimes called Letters Testamentary, are certified court documents which confirm the identity of the personal representative. The personal representative is responsible for managing the estate and completing the Probate process. There are two types of personal representatives: executors and administrators. When a person leaves a will specifically identifying their preferred personal representative, that representative is called an Executor. When a person fails to name a preferred personal representative, the court appointed personal representative is called an Administrator.
In this case, Janet did not leave a will and did not otherwise name a preferred personal representative. As a result, Jane was appointed Administrator of Janet’s estate. The Letters of Administration confirm Jane’s status as Administrator so she can access Janet’s bank account to pay final expenses and debts.
Administration of the Estate
Once we have the Order for Probate and Letters in-hand, we call the personal representative to schedule our first administration meeting. Administration is a broad term encompassing everything that happens with the estate from appointment of the personal representative through distribution of the assets to relatives. At the first administration meeting, we once again review the responsibilities of the personal representative and discuss the specifics of the case. In many matters, we schedule a second administration meeting during the first.
To make things more digestible, we typically break down the administration process into 3 phases.
1. Notice: The California Probate Code requires the personal representative to send notice to specific governmental entities as well as any known creditors. It is important to get these notices in the mail as soon as possible because each notice has a waiting period which must be satisfied before distribution can occur. Failing to get these notices out on time is one of the most common causes of delay in a Probate. Having an experienced attorney work through this process with you is the best way to avoid these sorts of delays.
2. Inventory and Appraisal: The Inventory and Appraisal is another court form created by the Judicial Council of California. This form lists all assets of the estate and provides their value as of date of death. For some assets, like cash accounts, the personal representative provides the value. For others, a court appointed Probate Referee must prepare an appraisal.
At our administration meeting, I met with Jane and briefly reviewed her responsibilities as personal representative. I then reviewed each of the notice documents – which I had prepared in advance. Finally, I showed her a draft version of the Inventory and Appraisal. For Janet’s estate, the Inventory and Appraisal was straightforward. I listed the bank account with the balance as of close of business on Janet’s date of death. Janet’s home would have to be appraised by the Probate Referee, so I listed it but left the value blank. I then asked Jane whether she was aware of any outstanding debts. Jane confirmed her mother had a credit card with an outstanding balance of about $1,000. She also confirmed John had paid for Janet’s burial expenses, which totaled approximately $3,500. I instructed Jane to pay the credit card and to mail a check to her brother, John.
3. Payment of Debts: In addition to notifying known creditors and paying proper debts, the personal representative is required to wait at least one hundred twenty (120) days before requesting distribution of the estate. This waiting period allows both known and unknown creditors the opportunity to submit claims. If a claim is submitted, the personal representative must then decide whether to accept or reject the claim. This can often lead to litigation over the validity of the debt. Thankfully, there were no unknown creditors for Janet’s estate.
Petition for Final Distribution
The Petition for Final Distribution is easily the most complex item in a standard Probate. Unlike most of the other documents which must be submitted to the Court, the Judicial Council of California does not provide a form for the Petition for Final Distribution. Instead, the document must be prepared from scratch. The technical nature of this document, along with the need to prepare it from scratch, makes it very difficult for someone without legal training to complete. This petition is the single most important reason to work with a qualified attorney.
As part of the Petition for Final Distribution the personal representative is required to submit an Account and Report to the Court. The Account is a specially formatted accounting report, usually prepared by a CPA or Enrolled Agent, which shows every transaction involving the estate since the date of death. The Report is a written description of the personal representative’s management of the estate. The purpose of the Account is to ensure the personal representative does not misuse the assets of the estate. The purpose of the Report is to ensure the personal representative has met the technical legal requirements which must be satisfied before final distribution.
Because Janet’s estate was relatively simple, Jane and I were able to complete all notice items shortly after her appointment as Administrator. Additionally, her brother was comfortable with the two debts paid and waived his right to a full accounting. As a result, we were able to prepare the Petition for Final Distribution in advance and file it with the Court immediately after the one hundred and twenty (120) day waiting period expired. Initially, our hearing date for the Petition for Final Distribution was set for May 15, 2020. However, due to a court closure, our hearing was postponed to August 14, 2020.
As with the Petition for Probate, everything required for the Petition for Final Distribution was properly submitted to the Court before our hearing. A few days before the hearing, the Court posted a Probate Note indicating the Petition for Final Distribution would be approved. On the afternoon of August 14, 2020, I went to the courthouse and picked up a certified copy of the Order for Final Distribution.
Closing the Estate
After receiving the Order, I scheduled a final meeting with Jane to discuss closure of the estate. I Instructed Jane to write three checks: (1) one to my office for our fee; (2) one to herself for her fee as administrator; and (3) one to her brother for half of the remaining cash. I also provided her with a receipt for John to sign upon receiving his check. I then arranged for the Order for Final Distribution to be recorded in Placer County. Finally, I had her sign an Ex Parte Petition for Final Discharge and Order. This is another form provided by the Judicial Council of California. I explained to Jane that once she sent back John’s receipt, I would file this Ex Parte document with the Court to close the estate and relieve her of the responsibilities of personal representative. A week later I did just that and the estate was closed.
This one is a bit long. Cheers to everyone who made it this far. I hope this summary has given you a better understanding of how the Probate process works. It is a complex, court-supervised process. If it is not handled correctly, that process can take even longer. I’ve said it over and over throughout this blog but I will say it once more. Probate is time-consuming and costly enough on its own. You don’t want to make matters worse by hiring the wrong attorney, or not hiring an attorney at all. If you need to Probate a loved one’s estate, I strongly recommend you hire a competent attorney with experience handling Probate matters. If your loved one lived in Placer County, Sacramento County, or El Dorado County, you are welcome to call us at (916) 917-5914 to schedule your free consultation.
Although it has always been important, certainly the Covid-19 pandemic has brought even more attention to having an Advance Health Care Directive in place. The purpose of this document is to ensure that your medical wishes will be respected, even if you lose the ability to make decisions for yourself.
The directive itself has two main parts. In the first part, you name the person or persons you would want to make health care decisions for you should you be unable to do so. This person is called a health care agent. When choosing a person to be your agent, it is vital to choose someone you trust to carry out your wishes. For most people, this means a spouse, child, family member, or close friend.
After naming them, you should also have a conversation with your prospective health care agents to explain your wishes, and to make them aware they might be asked to carry those wishes out. In our experience this helps both our client and the prospective agent. For our client, it helps to make sure there are no misunderstandings about what your wishes are. For the prospective agent, the clarity this conversation brings helps with the emotional impact of possibly making difficult health care decisions down the road.
The second part is where you outline your instructions for your health care. These are the wishes your agent will carry out if you are unable to make decisions for yourself. Although this list is not exhaustive, instructions in an advance health care directive include:
Once you have executed your Advance Health Care Directive, it is important you contact your health care provider to find out the most efficient way to make sure this document becomes part of your medical records. For most, this will mean uploading an electronic copy to your health care provider's website or dropping off a copy at your doctor's office. Whatever the method, this step helps ensure your health care providers know who to contact should there be a medical emergency.
Executing an Advance Health Care Directive, effectively communicating your health care wishes, and making sure it becomes part of your medical record, are all vital steps to make sure if there is ever a medical emergency, there is a plan in place to take care of you in the manner you desire.
We hope all of you are keeping safe and healthy. I want to thank everyone who has reached out to check in and offer support. Given the outpouring, I thought it would be a good idea to provide a quick update about your favorite law office.
First things first, we are open for business and weathering the storm of this pandemic well. This year has been a roller coaster for small businesses across the country, and we are no exception. Thankfully, we have a loyal client base which continues to be our single largest source of new referrals. To ensure a safer environment for our clients, our staff, and our community, we are now meeting with clients by telephone or Zoom whenever possible and taking appropriate precautions when face-to-face meetings are necessary.
Having said all that, when folks reach out, they don’t want to know how often we disinfect the conference room table. They want to know how Helen and I plan to celebrate Shane’s second birthday. He really is growing up so fast. Every day he gets a little bit bigger and a little more capable. His most recent obsession – jumping into the pool to scare Helen. Shane can’t swim yet and Helen’s heart skips a beat every time he does it. As for his birthday, we are keeping it small and arranging calls with friends and family throughout the day.
As many of you already know, James makes a yearly trip to Las Vegas to play in the World Series of Poker. For the first time ever, this year’s events were completely internet-based. It’s a big change for the World Series of Poker which is usually played live and in-person. As always, James did well for himself. I’ll let him provide the details.
I could not end this post without giving real recognition to our office manager/paralegal, Kim. She has taken charge of our office procedures and has personally implemented most of the changes. From disinfecting the conference room to learning how to e-file in Placer County, Kim has locked up the 2020 Shiells & Hammer MVP Award; all while navigating distance learning for her son and significant workplace changes for her husband. The best professional decision I ever made was opening this office with James. A close second was our decision to hire Kim.
All things considered; we are doing well. We hope you are too. As always, if you have questions about estate planning or just want an update on James's poker adventures, feel free to give us a call. (916) 917-5914.