Probate

What is Probate?

Probate is the court-supervised process created by California law to handle the distribution of a Decedent’s (the person who has died) estate. Probate is required whether the decedent died with or without a will. Probate can be bypassed with estate planning and using trusts. The word “probate”in latin means “proving”.

In short, probate is the process the state uses to determine who is the rightful person to receive the deceased person’s property when they died without leaving specific instructions, or to supervise that the property is distributed according to their will.

Probate Timeline

Download the probate timeline

Step Duration
Prepare and File Petition for Probate 1-2 months
Court hearing on the Petition for Probate 2-3 months
The following are issued: Letters of Administration, Orders for Probate, Duties and Liabilities, Issue Bond (if ordered), & **Letters of Testimentary ** 2-4 months
(if not contested)
Notice to Creditors 2-4 months
Notice to Department of Health Services Inventory & Appraisement 4-8 months
Pay State and Federal Taxes (if necessary) 6-12 months
Allow or Reject Creditor Claims  
Possible Preliminary Distributions  
Notice to Department of Health Services (if deceased received medical)  
Notice to Franchise Tax Board (if heir is out of state)  
Claim of Exemption (if assets transfer to a minor) 6-15 months
Receive Final Tax Letter from State and Federal (if appropriate) 6-18 months
File Petition for Final Distribution and Accounting 8-16 months
Hearing on Petition for final Distribution and Accounting  
Order Approving Final Distribution and Accounting  
Distribution of Assets to Heirs 9-17 months
Final Discharge Order (indicates close of probate case) 9-18 months
Final Distribution of Funds 9-18 months

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How Does The Probate Process Start?

Probate begins with the filing of a petition for probate at the Superior Court in the county where the decedent lived. One of the first things you should do as a family member when a relative passes away is consult with a probate attorney. They will help you prepare the petition. The petition should be filed by the person who wants to take responsibility for the estate by becoming executor or administrator.

An ‘executor’ is the person named in the will to represent the estate.

An ‘administrator’ is a person appointed by the court when there is no will, when the will does not name an executor, or when the named executor is unable or unwilling to serve. State law provides that the decedent’s closest relatives have the highest priority to become administrator of the estate.

Being executor can be a very difficult job. Administration of the estate includes managing the assets to prevent losses, paying bills for the estate, filing tax returns, preparing an inventory of the assets, locating heirs, posting public notice of important events, settle the estates debts, keep financial records, and dozens of other duties. The goal is to wrap up all of the loose ends of the decedent’s financial affairs and distribute the estate to the beneficiaries. Administration can be very technical and time consuming. As a fiduciary, if you screw up- you might find yourself financially liable!

Fortunately, as executor you do receive something for taking on this large task – a small fee from the estate as compensation for the hard work. Compensation is fixed by law and is based on the value of the estate.

As executor, you will work very closely with the probate attorney. The probate attorney compensation is fixed by law and is the same rate as the executor. The other thing to note about Probate is that it takes quite a long time to finish, 8-18 months.

When there is no will, probate determines the order of inheritance by intestate succession. The estate is divided into as many equal shares as there are living members in the ‘issue’. The issue order is:
Spouse
Children
Grand Children
Parents
Descendents Siblings (Uncles and Aunts)
Decedent’s Nephews and Neises
Grandparents

Escheat – estate reverts to the state if there no heirs can be found at all.

Executor’s Duties

Executor’s Duties

  • Read the will
  • Safeguards the assets
  • Petitions the court for probate of the will
  • Assemble and inventory all of assets
  • Procure appraisal of all assets
  • Administer the estate
  • Make all tax returns
  • Settle all proper claims
  • Distribute the probate estate
  • Obtain final discharge

Download the full Estate Executor’s Duties During the Probate Process

Probate Sales

There are two types of Probate sales: court confirmation and no court confirmation. The Listing Remarks on a Probate listing will specify which of the two it is.

Offers for Probate sales are written on a special purchase contract called the “Probate Purchase Agreement” instead of to the Residential Purchase agreement. This is because the sales terms for probates differs quite a bit from a standard sale.

Differences Between Buying a Probate House and a Standard Sale:
-Offers written on “Probate Purchase Agreement” and not Residential Purchase Agreement
-Larger Earnest Money Deposit (for court confirmation), 10% down payment instead of traditional 3%.
–‘As Is’ Sale
-No Termite, No Retrofit
-No Home Warranty
-No Loan Contingency
-Sometimes: Non Contigent Sale: No Loan Contingency, Appraisal Contingency, or Inspection Contingency.
-Court Confirmation is Subject to Overbidding

The terms when buying a probate house, vary greatly from sale to sale. The sale terms are decided by the court, the probate attorney and the listing agent. Probate sales are always ‘AS IS’ sales. ‘As is’ means that the seller will give the buyer no credits and won’t fix anything. The hotter the real estate market, the more tough the terms of the probate sale are going to be. Probate sellers may not pay for termite, retrofit, and may demand no inspection contingency or no contingencies all together. To find out the terms of the sale the listing agent will usually produce an offer guidelines document that you can review or you can ask them before writing an offer.

Probates are Fixers, require work, and may not qualify for traditional financing. By default the Probate Purchase Agreement has no Loan Contingency.

Or, you can write your offer with no Loan Contingency even if you plan to finance the purchase, and take the risk that if you cannot get financing you will lose your Deposit. It really depends on how strong the market is and how many offers the property gets. The seller may accept a financed offer if its the only one they receive.

No Court Confirmation Probate

The timing of a No Court Confirmation probate are a lot like a normal sale and will take 30-45 days. Once the seller accepts your offer, there is no overbidding, and no approval from the court is necessary. You can open up escrow immediately once your offer is accepted. No Court confirmation has flexibility with the Earnest money deposit amount as well, it doesn’t need to be 10%.

Court Confirmation Probate

Court Confirmation probate sales require 10% deposit of the purchase price, by law, to be made at the time of a successful winning bid at the court confirmation hearing (buyers with an accepted offer on a court confirmation probate don’t need to worry about having their 10% down payment tied up while waiting for a court date). Low down payment buyers such as 5% down or FHA buyers can’t qualify for the sale terms of a court confirmation probate.

Court Confirmation Probate sales take longer. From when you offer is accepted by the seller, the probate attorney will request a court date which will take four to six weeks. The listing price for a court confirmation probate is determined by a court referee who provides an appraisal to court. The court may only legally sell the property for 90% of the court referee’s appraised value. Court confirmation hearings are subject to overbidding, more on that below. Having an accepted offer gives you a slight edge at the court confirmation hearing because the minimum overbid is at least 5% more than the accepted offer price. If you are the winning bidder, closing will take place ~30 days after the hearing.

Overbidding

A court confirmation hearing is basically a public auction. Even if you have an accepted offer on a court confirmation probate listing, you need to show up to the court confirmation hearing and get the court’s approval to get the property- so you better show up for your court date! I recommend to buyers who have lost a bid on a court confirmation probate listing to a higher offer to still show up for the court confirmation hearing, because the buyer with the accepted offer might bungle it or not show up and you can pick up the property there. A property isn’t sold until its sold!

The Minimum overbid amount is 10% of the first $10,000 plus 5% of the remaining balance.

EXAMPLE: A Probate property is listed at $650,000.
The accepted offer is $625,000.
The minimum overbid is calculated as follows:
Accepted Offer = $625,000
+$10,000 x 10% = $1,000
+$615,000 x 5% = $30,750
________________________
Minimum Overbid = $656,750

Court Confirmation Hearing

The judge will call the sale and ask everyone who is there for the sale to stand up and identify themselves to the court. The judge will state the opening bid and and set the increment for bids. In the example above for a $656,750 min. overbid increments might be $3,000 or $5,000 or something. Just because the increment is $5,000 it doesn’t mean that you can’t bid more if you want. Sometimes going higher quickly will discourage other bidders from continuing.

Whoever is the highest bidder wins. They are responsible for depositing 10% cashiers check.

What to Bring to Overbid?

When buying a probate house, be prepared before you go to court. Thoroughly review the comparable sales and be familiar with the sale terms. I recommend setting a maximum number you are willing to pay for the property and stick to it. It is easy to get caught up in emotion during an auction and its important that you don’t stretch yourself too thin or overpay. For the probate attorney and the court to allow you to overbid, you must show a cashier’s check for at least 10% of the minimum overbid. Personal checks are not accepted. The cashier’s check must be made payable to the right party. Ask the listing agent before you come to court. It is also a good idea to bring proof of funds and a preapproval letter (if financing) to show that you are a well qualified buyer.

Are you planning on buying a probate house? Have any more questions?

Feel free to call us directly at 925-603-3393.

12 Common Mistakes

12 most common mistakes an administrator or executor can make during probate and how to avoid them.

What follows below is a list of common mistakes that can be costly if not avoided. We encourage you to read thoroughly. It has helped many executors and administrators alike and we hope it can assist you as well.

No outcome in mind

Beginning with the end in mind provides clarity and focus throughout the entire probate process. Although it can be an overwhelming experience (especially if the decedent is your close relative), it does not have to be stressful, if you have a clear reminder of and commitment to what the end goal is. Here are some examples: peace of mind, pay off debt and taxes a.s.a.p., settle with heirs, and maximize value of estate, just “be done with it and get it over” and others. Whatever the end goal is, it must be agreed upon by all so that you get support and have confidence in the decisions you make as the executor/administrator.

Not educating yourself on the probate process and deciding if you need / want a lawyer

You can educate yourself on our site about the process and read the timelines and/or go to your local courthouse to get more information. Once informed, it does make a lot of sense to talk to an attorney about the process and see what he/she thinks might be appropriate in your situation. You may then decide that you can handle this “pro per” meaning without a lawyer and represent the estate yourself as you go through the probate process.

Relying on your attorney for EVERYTHING

You might decide to use an attorney because your case might be slightly complicated or the estate is not in your hometown or state or you simple have no time on your hands. Your probate attorney is an expert in his field and will be paid as such. If you rely on your attorney for expertise such as taxes, securing the real estate, selling real estate, maintaining property, etc. you are not fully using local talent and maximizing the value of the estate. Financial planners, CPA’s, local realtors, contractors and estate planning firms are experts in their perspective field and can give you specialized knowledge which pays off in both the short run and long term.

Marketing real estate too late

Do not make the mistake of waiting too long to market any real estate, if you’d like to settle the estate as quickly as possible. Once you have been approved as the executor of the estate, you can begin soliciting offers on the real estate. In other words, parallel to handling everything else, you can list with a realtor, get advice, solicit offers and even go into escrow. Escrow will not close until you have acquired letters testamentary / letters of administration. As long as your buyers are aware of this, you will do fine. Be sure to use a realtor that understands probate.

Securing and maintaining real estate. You are responsible

Now that you are responsible for the real estate that means you must make sure it is secured and properly maintained. If you are not in the same city or state this can become a challenge for you, especially if curb appeal suffers and squatters take over. A good realtor that understands your probate needs can also help you maintain the property by using people in his/her network.

Choosing friends over the right professionals to do a particular job

Now that you might need an attorney, realtor, tax advisors, financial planning and estate planning, you can find yourself surrounded by well meaning friends that want to help. E.g. you might have an attorney friend that practices business litigation that will help you with probate.  This is where you must be cautious and make sure you pick your team of professional experts that will get the job done because this is all they do. Similarly, you might have a realtor friend that specializes in a certain area of town or other type of real estate that wants to list the real estate for you. Again, having a realtor with probate experience that specializes in the area of your real estate location will benefit you  and ensure you get the most out of it.

Not collecting paperwork and submitting documents in a timely fashion

In the member section of our site www.usprobateservices.org you will find a diagram of the probate timeline that mentions documents and actions taken. Depending upon your locality and process it may vary just a little. It’d be a shame to get to the very end of the process and realize you can’t settle because one document is missing.

Waiting too long to begin the probate process

As time goes by taxes add up, creditors become pushier and heirs more impatient. Losing a loved one is devastating and moving forward can at times almost seem emotionally impossible. However, waiting too long will add pressure and demands from others to your mourning process. Give yourself time to mourn but also realize that the longer you wait the greater the demands.

Not keeping accurate accounting records

If you are not comfortable with or not used to accounting and balance sheets, it make sense to enroll a professional such as a book keeper or CPA to help you. At the time of settling the estate all numbers must align and make sense. If not, you might get objections from the heirs or maybe even a judge. In many cases where records were not properly kept, the probate process lasted up to 24 months when it should have taken half that time or less.

Not picking up mail from decedents property

This is a simple one. As soon as you can, ask that the post office forwards all mail to an address or PO Box that you have access to. The reason being, that you may miss out on important notices and claims from creditors and/or lenders. Another good reason is that you do not want the property to be too inviting for burglars or vandalism. When mail piles up, it is a sure sign that the property is vacant.

Not keeping open communication with heirs

This goes back to the initial mistake “No outcome in mind” when you begin the process. At the outset of probate it is crucial that all heirs are on the same page and agree that you handle the estate. Along the way you may have smaller setbacks and it will not go as planned. Make sure you communicate every setback and progress. If an heir counts on his/her inheritance by a certain date based on the agreed upon goal you all set, then any delays will greatly impact the heirs life.

Not knowing your options when it comes to selling real estate

Real Estate is the biggest component of the estate’s assets. Depending upon your desired outcome and goals you should know that you have options in real estate. The basic and straight forward approach is to list with a local realtor. You may also find yourself with real estate that needs some work and could therefore fetch a greater price after some repairs. If you do not have the cash for the repairs, but ample time on your hands, there are people we can refer you to that will gladly partner with you on the repairs. Finally, if you are in a rush, don’t have cash to fix up the real estate and just want to get done with it; an investor will pay cash for it. Knowing your options gives you flexibility which gives you power in your decision.

Source: USProbateServices.org

What is a C.P.R.E.S.?

  • CPRES stands for Credited Probate Real Estate Specialist
  • To become a CPRES we pass a certification exam given by US Probate services.org
  • You can locate our profile by visiting www.usprobateservices.org/jamescope

Finding an agent that’s right for you.

  • Must have a CPRES designation
  • Understands the needs of the estate
  • Able to represent you at the courthouse
  • Be able to speak the legal language required in the probate process

We coordinate the entire sale process of your real estate assets.

  • Probate contracts
  • Inspections
  • Repairs
  • Contractors
  • Negotiation
  • Escrow to closing

We are with you every step of the way.

Ping & Jim Realtors
Ping & Jim Realtors are experienced residential real estate agents, with a specialty in probate sales. We are dedicated to providing our clients with the highest level of professionalism. Your transaction will be handled with utmost care and attention to detail. Our goal is to get your real estate sold quickly and for the highest possible price. We help you move forward with your life!