An estate is technically created when someone who owns assets passes away.
Estate administration refers to the administration of assets and payment to one’s creditors, upon the demise of someone who either dies intestate (without a will) or testate (with a will). If a decedent dies intestate, the California Probate Code will determine how the estate assets are distributed upon the death of the person. The heirs at law, those who inherit the assets and property, are determined by the rules of descent and distribution. Conversely, when someone dies with a will in place, he or she determines who his or beneficiaries are by doing so in the will. In both cases, the decedent’s estate must go through a formal probate process. Probate is the court process by which a will is determined to be valid, the creditors have a claim submission period and then the assets are ultimately distributed to either the heirs at law or the beneficiaries, depending on if the person died intestate or testate.
In California, the probate process can be quite lengthy, a minimum of one year, as well as expensive. Both the personal representative (refers to executor and administrator) and the attorney representing the personal representative are compensated based on a percentage of the gross value of the assets in the estate.
A comprehensive and properly drafted estate plan, that includes a living trust as the cornerstone document, will allow an estate to avoid the court supervised probate process.
California law requires the Trustee of any trust, to follow similar procedures as a probate proceeding; however, generally the process is not court supervised. It is important for a Trustee to be represented by an attorney experienced in these procedures, otherwise a Trustee can be held liable for his or her improper conduct. A properly prepared estate plan, along with a well represented Trustee, will expedite the administration of the trust and it will minimize the costs involved to do so.