WHAT IS ORANGE COUNTY CALIFORNIA PROBATE?

William Sweeney

When a loved one dies in Orange County, California, families often have a host of issues and concerns they must address at a difficult time. As can be seen in this article, the probate process in Orange County, California can be confusing even under the best of circumstances, and you may have questions about the steps you will need to take to ensure that your loved one's final wishes are carried out. Please see my article on "Common-Mistakes-An-Administrator-Or-Executor-Can-Make-During-Probate-And-How-To-Avoid-Them" at http://www.sweeneyprobatelaw.com/Articles/Common-Mistakes-An-Administrator-Or-Executor-Can-Make-During-Probate-And-How-To-Avoid-Them.shtml.

I am attorney Bill Sweeney, and at Sweeney Probate Law, I help families throughout Orange County, California deal with questions related to probating an estate. I have over 40 years of experience with the probate process in California, and I am committed to providing you with the guidance and advice you need as your case moves forward.

HANDS-ON EXPERIENCE DEALING WITH ORANGE COUNTY, CALIFORNIA PROBATE ISSUES

Many of my clients come to me not knowing where to start. I will explain the probate process to you and work with you to determine the steps you must take to complete the probate requirements.

If your loved one lived in Orange County, California at the time of passing, the Orange County's probate requirements will apply as set forth below in more detail. I will assist you with filing the appropriate paperwork as well as reviewing any documents or assets involved in your case.

As your lawyer, I will help you understand the specific matters that must be addressed in your particular situation. I will work with you to help you find the right option for you and your family. You will be able to ask questions and you will always be able to find out what is happening with your case.

WHAT IS PROBATE IN ORANGE COUNTY, CALIFORNIA?

Orange County, California probate is when the Orange County Probate Court supervises the processes that transfer legal title of property from the estate of the person who has died (the "decedent") to his or her beneficiaries.

Usually, you have to:

  • Prove to the Court that the Will is valid (this is usually routine),
  • Appoint a legal representative with authority to act on behalf of the decedent,
  • Identify and inventory the decedent's property, and have that property appraised,
  • Pay debts and taxes, and
  • Distribute the remaining property according to the terms of the Will or to the decedent's heirs.


IS PROBATE NECESSARY IN ORANGE COUNTY?

If the person who died did not have any property to transfer, probate is usually not necessary. The deceased person's survivors may decide to open a probate if there are debts owed or if there is a need to set a deadline for creditors to file claims. When there is property to transfer, the probate process also provides for the distribution of the estate's property to the decedent's heirs.

DOES ALL ORANGE COUNTY PROPERTY GO THROUGH PROBATE WHEN A PERSON DIES?

No. The term "probate estate" refers to any property subject to the authority of the Orange County Probate Court. Assets distributed outside the probate process are part of a person's "non-probate estate." California has "simplified procedures" for transferring property for estates worth under a certain amount (from $50,000 to $150,000 depending on the circumstances and the kind of property).

There is also an easy way to transfer property to a surviving spouse, property held in Joint Tenancy or Community Property with Right of Survivorship, and life insurance and retirement benefits. With regard to transferring property to a surviving spouse see my article at http://www.sweeneyprobatelaw.com/Articles/My-Spouse-or-Registered-Domestic-Partner-Left-Me-Property-What-Should-I-Do.shtml.

SHOULD I CHOOSE THE SIMPLIFIED PROCEDURES?

Not necessarily. There may be debts or tax claims that make probate a better option for you. If there are a lot of issues to handle, going through probate allows you to pay the person who deals with the creditors and taxing authorities.

DOES LIFE INSURANCE OR RETIREMENT BENEFITS NEED TO GO THROUGH PROBATE?

No. The benefits can be paid directly to a named beneficiary. Money from IRAs, Keoghs, and 401(k) accounts transfer automatically as long as the persons are named as beneficiaries. Bank accounts that are set up as pay-on-death accounts (PODs) or "in trust for" accounts (a "Totten Trust") with a named beneficiary also pass to the beneficiary without probate. Problems with distribution arise if a beneficiary predeceases or dies after the death of the account holder.

What happens if there is no beneficiary designated? See my article at http://www.sweeneyprobatelaw.com/Articles/No-Living-Beneficiary-on-an-Individual-Retirement-Account-Ira-What-Now.shtml.

DO LIVING TRUSTS GO THROUGH PROBATE?

No. When a living trust holds title to some of the decedent's property, that property also passes to the beneficiaries without probate. There are times when property is not titled in the trust at the death of the trustor or trustors. Please seem my article on what may be done in that circumstance. http://www.sweeneyprobatelaw.com/Articles/Real-Estate-Not-In-The-Trust-Probate-Or-Heggstad-Petition-New-Developments.shtml.

HOW MUCH DOES ORANGE COUNTY PROBATE COST?

The cost of probate is set by state law. When all the costs are added up - these may include appraisal costs, executor's fees, court filing fees and certified copies, costs for a type of insurance policy known as a "surety bond," plus legal and accounting fees--probate can cost from 4% to 7% of the total estate value, sometimes more. If someone contests the Will, there could be thousands of dollars of litigation costs.


HOW LONG DOES ORANGE COUNTY PROBATE TAKE?

California law says the personal representative must complete probate within one year from the date of appointment, unless s/he files a federal estate tax. In this case, the personal representative can have 18 months to complete probate. If probate has not been completed by that time, the personal representative must file a status report to the court to explain what still has to be done and how much time that will take.

If the personal representative does not report to the court, the beneficiaries can ask the court to order him or her to file an accounting or take other actions to close probate. The court can remove the personal representative and appoint someone else. Sometimes there are circumstances that can make probate take longer.

If there is a Will contest (a claim filed with the court that all or part of the will is not valid), or the size and complexity of the estate requires extra time, or it is hard to find beneficiaries, the process can drag out. Some probate cases take years to resolve.


WHERE WILL THE PROBATE HEARING BE?

In California, probate hearings are in the Probate Department of the Orange County Superior Court. The Probate Department is located at the Central Justice Center in Santa Ana, California.

If you have to file a probate petition in another state because there is real property in that state, the courts in that state may use a different name. In New York, for example, the probate court is known as the Surrogate Court.


WHO IS IN CHARGE OF THE PROBATE PROCESS?

If there is a Will, the person named as executor will usually be appointed as the personal representative - this means s/he is responsible for managing the estate and following probate rules and procedures. The executor has no authority to act as personal representative until s/he is appointed by the court and formal "Letters Testamentary" are issued by the Court Clerk.

If there is no Will, or if the Will doesn't name an executor, or the person named as executor in the Will is unable to be executor or does not want to be executor, the Orange County Probate Court appoints someone called an administrator to handle the process. The Court usually chooses the closest living relative, or a person who will inherit some portion of the decedent's assets.

WHO CAN BE THE PERSONAL REPRESENTATIVE?

See my article at http://www.sweeneyprobatelaw.com/Articles/Do-I-Have-To-Serve-As-Executor.shtml. Generally, the personal representative does not have to be a legal or financial expert. But, s/he must have reasonable prudence and judgment and be very careful, honest, loyal, impartial and diligent. This is called a "fiduciary duty" -- the duty to act with good faith and honesty on behalf of someone else.

The personal representative should have good organizational skills and be able to keep track of details. It is preferable if he or she lives nearby and is familiar with the decedent's finances. This makes it easier to do tasks and find important records.

WHO IS NOT ALLOWED TO BE THE PERSONAL REPRESENTATIVE?

The following people cannot be the personal representative:

  • A minor,
  • A person subject to a conservatorship or otherwise incapable of performing the duties of personal representative,
  • A surviving business partner of the decedent, if an interested person objects (unless the Will names the partner as executor), or
  • A non-resident of the U.S. (unless the Will names the non-resident as executor).

IN ORANGE COUNTY DOES THE ORANGE COUNTY PROBATE COURT SUPERVISE THE PERSONAL REPRESENTATIVE?

Not usually. But, in some situations the Court requires the personal representative to ask the Court's permission to sell real estate or business interests owned by the estate.

The personal representative cannot do any of the following things without the Court's permission:

  • pay fees to himself or herself,
  • pay fees to his or her attorney,
  • make a preliminary distribution of property to beneficiaries (with a few exceptions), or
  • close the estate.

If the personal representative lives outside of California, the court may require that s/he get a surety bond (an insurance policy that protects the estate beneficiaries in the event of the personal representative's wrongful use of the estate's property), even if the Will waives this requirement.


WHAT DOES THE PERSONAL REPRESENTATIVE DO?

The Personal Representative must:

  • Decide if there are any probate assets;
  • Locate the decedent's assets and manage them during the probate process. This could take up to a year or longer and may involve deciding whether to sell real estate or securities owned by the decedent;
  • Receive payments due to the estate, including interest, dividends, and other income (e.g., unpaid salary, vacation pay, and other company benefits)
  • Set up an estate checking account to hold money that is owed to the decedent -- for example, paychecks or stock dividends;
  • Figure out who is going to get what and how much under the will. If there is no will, the administrator will have to look at state law (probate code sections 6400 – 6414 , called "intestate succession" statutes) to find out who the decedent's heirs are and determine each heir's share of the estate;
  • Value or appraise the estate's assets;
  • Give official legal notice to creditors and potential creditors of the probate proceeding and the deadlines for creditors to file claims, according to state law (for more information see my article at http://www.sweeneyprobatelaw.com/Articles/Notice-to-Creditors-With-Claims-Against-California-Probate-Estates.shtml;
  • Investigate the validity of all claims against the estate;
  • Pay funeral bills, outstanding debts, and valid claims;
  • Use estate funds to pay continuing expenses -- for example, mortgage payments, utility bills and homeowner's insurance premiums;
  • Handle day-to-day details, such as disconnecting utilities, ending leases and credit cards, and notifying banks and government agencies -- such as social security, the post office;
  • File tax returns and pay income and estate taxes – including a final state and federal income tax return covering the period from the beginning of the tax year to the date of death;
  • After getting the court's permission, distribute the decedent's property to the people or organizations named in the will, or to the decedent's heirs if there is no will; and
  • File receipts for distribution and wrap up any closing details for the estate.


IF I AM NAMED AS EXECUTOR IN A WILL, DO I HAVE TO SERVE?

No. See my article at http://www.sweeneyprobatelaw.com/Articles/Do-I-Have-To-Serve-As-Executor.shtml. If you choose not to serve, the Court will probably appoint the alternate executor to be the personal representative. If there is no alternate executor, or if that person doesn't want to serve, the Court will appoint someone to serve. The Court usually appoints a capable family member or an independent professional fiduciary.

If you decide to be the personal representative, you can resign at any time. But, you may have to give an "accounting" to the Court for the time you served.


IF I SERVE AS EXECUTOR, WILL I GET PAID?

Yes. In addition to your out-of-pocket expenses to manage and settle the estate, personal representatives usually earn a statutory fee of 2% - 4%of the probate estate. The percentage decreases as the size of the estate increases. The Court must approve all fees and expenses. And, in extraordinary circumstances, the Court may allow other fees.

Fees are taxable as ordinary income and must be reported on your personal income tax return. So, if you are the personal representative and the sole beneficiary of the estate, it usually does not make sense to take any fees. But, the money you get as beneficiary from the estate is income tax free.

WHAT HAPPENS IF THE PERSONAL REPRESENTATIVE FAILS TO PERFORM HIS OR HER DUTY?

The court may lower or deny compensation and can replace the personal representative with someone else. The personal representative may even have to pay for any damages he or she caused.

A personal representative may be held liable for:

  • Improperly managing the assets of the estate,
  • Failing to collect claims and money due the estate,
  • Overpaying creditors,
  • Selling an asset without the authority to do so, or at an inappropriate price,
  • Not filing tax returns on time,
  • Distributing property to the wrong beneficiaries, or
  • Distributing property to beneficiaries before all creditors have been paid, etc.


WHAT IF SOMEONE OBJECTS TO THE WILL?

If someone files an objection to the Will, or produces another Will, a "Will Contest" has begun. Will contests are not uncommon, but few people actually win one. Still, they can cost a lot of money and time.

WHO CAN CONTEST A WILL?

Only a person with "standing" can contest a Will. This means the person must have a personal financial stake in the outcome.

Examples of people with standing to contest a Will are:

  • A child or spouse who was cut out of the Will
  • A child who receives one third of the estate if a sibling receives two thirds,
  • Children who feel that the local charity should not get all the parent's assets,
  • Anyone who was treated more favorably in an earlier Will.

Sometimes, there is a Will contest because someone wants a different person, bank, or trust company to serve as personal representative for the estate, or as a trustee of trusts created by the Will.

WHEN CAN A WILL BE CONTESTED?

Most challenges to Wills are by potential heirs or beneficiaries who got little or nothing. Will contests must be filed in the Orange County Probate Court within a certain number of days after receiving notice of the death, or petition to admit the Will to probate, or issuance of Letters Testamentary to a personal representative.

Examples of reasons to challenge a Will are:

  • there is a later Will which, if valid, would replace the earlier Will;
  • the Will was made at a time the decedent was not mentally competent to make a Will;
  • the Will was the result of fraud, mistake or "undue influence";
  • the Will was not properly "executed" (signed by the decedent);
  • the so-called Will is actually a forgery;
  • for some other reason (such as a pre-existing contract) the Will is invalid.

If there is a Will contest, you should hire an experienced lawyer. The Orange County Probate Court may invalidate all of the Will or only the challenged portion. If the entire Will is found invalid, the proceeds will probably be distributed according to the state laws of intestacy, unless there is a prior revoked Will that is revived and admitted to probate.


WHAT IF THERE IS NO WILL?

If a person dies without a Will (known as dying "intestate"), the Orange County Probate Court appoints a personal representative (known as an "administrator"). For more detail see my article at http://www.sweeneyprobatelaw.com/Articles/WHAT-HAPPENS-IF-A-PERSON-DIES-WITHOUT-A-WILL.shtml. The major difference between dying testate and dying intestate is that an intestate estate is distributed according to state law (known as "intestate succession"). A testate estate is distributed according to the instructions left by the decedent in his or her Will.

WHAT HAPPENS IF WE CANNOT FIND A WILL?

If a Will is lost or cannot be found, the specific facts and circumstances and state law will determine what happens. For instance, if the Will is missing because the decedent intentionally revoked it, an earlier Will or the laws on intestate succession would determine who gets the decedent's estate.

Or, if a Will is missing because it was stored in a bank vault destroyed in a fire, the Orange County Probate Court may accept a photocopy of the Will (or the lawyer's draft or computer file), if there is evidence that the decedent properly signed the original.


WHAT IF THE DECEDENT OWNED LAND IN MORE THAN ONE STATE?

The probate laws of the state in which the decedent was a permanent resident determine who will get the decedent's personal property (wherever it was located) and the decedent's real property located within the state. This is why probate is almost always filed in the decedent's home state.

If the decedent owned real property in another state, that state's laws determine how the real property will be distributed. There will be probate in each state where there is real property, in addition to the home state. Each state has its own method for distributing the decedent's real property. Even if there is a Will, the Will is first admitted to probate in the home state, then it must be submitted to probate in each state in which the decedent owned real property.

The extra probate procedure is called "ancillary probate." Some states insist upon the appointment of a personal representative who is a local resident to administer the property in that state. See my article on ancillary probate at http://www.sweeneyprobatelaw.com/Articles/What-Is-An-Ancillary-Probate-In-California.shtml.

What happens if a non-citizen dies owning real property in Orange County, California? See my article at http://www.sweeneyprobatelaw.com/Articles/Non-U-S-citizen-Owned-Property-in-California-at-the-Time-of-Death.shtml


HOW DO CREDITORS GET PAID?

Part of the probate process is to notify creditors of the death. Notice requirements vary. In some cases, you must provide direct notice. In others, you must publish a notice in a newspaper in the city where the decedent lived.

Creditors must file a claim with the court for the amounts due within a fixed period of time. If the executor approves the claim, the bill is paid out of the estate. If the executor rejects the claim, the creditor must sue for payment. If there is not enough money to pay all debts, state law determines who gets paid first.

The personal representative most likely will sell property to pay approved creditor claims. Remaining claims are paid on a pro-rata basis

IF I AM A BENEFICIARY AND THE ESTATE DOES NOT HAVE ENOUGH MONEY, DO I HAVE TO PAY CREDITORS OUT OF MY OWN POCKET?

Generally, no. The law says you cannot be made responsible for others' general debts without your consent. Unless the decedent gave away his or her assets to someone shortly before dying, or otherwise acted in concert with them to defraud the creditors, the beneficiaries should not have to pay the creditors just because they are beneficiaries.

There may be nothing left in the estate for the beneficiaries after paying the creditors. But, the beneficiaries will not owe the creditors money. Still, if the children or beneficiaries took property or benefits from the decedent or the estate, or assumed liability for care given the decedent, or guaranteed payment, they can be liable for some or all of the decedent's debts separately.


HOW ARE TAXES HANDLED IN PROBATE?

See my article at http://www.sweeneyprobatelaw.com/Articles/Individual-Fiduciary-And-Estate-Tax-Obligations-Of-Personal-Representatives.shtml. In general, for federal and state tax purposes, death means two things:

  • It marks the date of the close of the decedent's last tax year for filing an income tax return, and
  • It establishes a new, separate entity for tax purposes, the "estate."

For federal taxes, you may have to fill out and file one or more of the following forms. (It depends on the decedent's income, the size of the estate, and the income of the estate):

  • Final Form 1040 Federal Income Tax return (the decedent's personal income tax return)
  • Form 1041 Federal Fiduciary Income Tax returns for the estate
  • Form 709 Federal Gift Tax return(s)
  • Form 706 Federal Estate Tax return

For California taxes, the executor must file any needed state income tax return, state fiduciary income tax returns during the probate period, estate tax and gift tax returns. There may be other taxes, too, like local real estate and personal property taxes, business taxes, and any special state taxes.

The executor must also check for taxes owed for years prior to the decedent's death.

AM I RESPONSIBLE FOR PAYING THE REST OF MY DECEASED SPOUSE'S BILL?

Maybe. If you and your spouse shared the same bank account and credit cards, checks, etc., then you may have to pay the bill. If the credit cards or accounts were opened with only your spouse's information as reference, then you may not be liable. Creditors usually collect their debts from the estate before the remainder is divided among the heirs.

Each case depends on the circumstances.

HOW CAN I FIND OUT IF THERE WAS A WILL?

First, check with the Orange County Probate Court in the county of the state where the decedent lived. If the Will was filed, it will likely be available to the public for viewing. And, you can purchase a copy.

But many people, even with substantial assets, die without a Will. And, if the decedent held all property through a living trust or a joint ownership arrangement, there may be no need to probate the Will.


WHAT IF SOMEONE DIES AND I HAVE THE WILL IN MY POSSESSION?

The law says you must "deposit" the Will with the superior court in the county where the decedent lived, even if there will be no probate. There is a fee to deliver the Will to court. But, the court does not accept Wills for persons who are still living.

AS AN HEIR, HOW DO I STAY INFORMED OF WHAT IS HAPPENING IN THE ORANGE COUNTY PROBATE CASE?

You will receive mailed notice of certain petitions filed, including the petition for appointment of the personal representative and the final petition when it is time for the estate to be closed and distributed. If the personal representative wants to sell real property, you should also get a Notice of Proposed Action.

If you want to get copies of everything filed in the Orange County Probate Court concerning the estate, file a Request for Special Notice. There is a fee to file this document.

WHAT ARE THE STEPS IN THE PROCESS TO PROBATE A DECEDENT'S ESTATE IN ORANGE COUNTY, CALIFORNIA?

Most cases follow these steps:

Step1

In most cases, the person requesting appointment as personal representative (executor or administrator) hires an experienced probate lawyer to prepare and file a Petition for Probate.

In some cases, the person requesting appointment will handle the probate without hiring a lawyer, as discussed above.

Step2

The probate lawyer, or the petitioner without a lawyer, arranges to mail notice to everyone named in the decedent’s Will (when there is a Will) and all his/her legal heirs about the death and the probate hearing.

The notice must also be published in the newspaper where the decedent lived to let creditors know about the hearing. Notice gives everyone notified an opportunity to object to admitting the Will and to the appointment of the personal representative.

Step3

The hearing usually takes place several weeks after the matter is filed. The purpose of the hearing is to determine the validity of the Will and to appoint the personal representative.

Sometimes, the Court will need the people who witnessed the decedent's signature on the Will to sign a declaration. If there are no objections, the court will approve the petition and appoint the personal representative.

Step4

The personal representative must identify, take possession of, and manage the probate assets until all debts have been paid and tax returns filed. This process usually takes about a year. Depending on the terms of the Will (if there is a Will), and on the amount of the decedent's debts, the personal representative may have to sell real estate, securities or other property.

For example, if the Will makes cash gifts but the estate consists mostly of valuable artwork, the art may have to be appraised and sold to produce cash. Or, if there are unpaid debts, the personal representative may have to sell some of the estate property to pay them.

Step5

After paying the debts and taxes, the personal representative must file a report with the court. The report accounts for all income received and payments made on behalf of the estate.

The judge will then authorize the personal representative to divide the remaining property among the people or organizations named in the Will.

Step6

The property will be transferred to its new owners.

If you wish to gain more information please contact me for a free consultation. I will spend time with you to answer your questions. From my office in Southern California, in addition to Orange County, I represent families in all California counties, including Southern California Counties such as Imperial County, Los Angeles County, San Bernardino County, and San Diego County. I also represent parties residing outside of California that have probate matters affecting real and/or personal property in California..

To schedule a consultation, call me toll free at 800-575-9610 or locally at 760-989-4820. I enjoy meeting in person whenever possible, but am also available via Skype and email or through my online contact form.

Disclaimer: This article is intended to provide general information. The content of this publication is for informational purposes only. Neither this publication nor its author is rendering legal or other professional advice or opinions on specific facts or matters. No attorney-client relationship is created by this advisory, nor by any response to the information herein, unless and until a conflicts review has been conducted by William K. Sweeney, and a written agreement containing all terms of representation has been signed.

Copyright © 2017, William K. Sweeney, Attorney at Law. All rights reserved.