3 ms·

Yes, but at least some US jurisdictions require an attorney (and fee) to go through probate. California even charges the fee as a percentage of the gross value

by sowbug 3y ago

Yes, but at least some US jurisdictions require an attorney (and fee) to go through probate. California even charges the fee as a percentage of the gross value of the estate, ignoring debt. So you can die with zero net worth, but your estate still has to cough up $40,000 or so to pay an attorney because you owned a single family residence with an underwater mortgage. That's doesn't happen with a trust.

gpderetta 3y ago
If you have zero networth (or the networth would be less than the fees), can't they just disclaim your inheritance?
- sowbug 3y ago
  Yes, but maybe it's your family's home, where your now-orphaned kids have lived all their lives, and they might not want to have to move and change schools just to pay an attorney whose services they didn't want. Their guardian might be able to figure out a way to pay the mortgage and maintain their stability, if it weren't for the irrationally calculated probate fee.
Moto7451 3y ago
California also has processes that bypass probate depending on the net worth of the diseased. You should not be paying anyone $40K just for probate in California. There is a progressive fee schedule that would limit the costs of a $1MM estate to about $20K. If you really don’t want that property, just let the bank repossess it. You’re not required to do anything with it. If for some reason the house was not foreclosed on you would eventually be able to claim it from the state. Banks also have procedures for next of kin to take over mortgages while you sort this out, should you want to. My brother passed this year and I paid an attorney about $1000 for some very basic templated documents on a probate-less estate in CA. The key was setting everything (before passing!) to have myself or the intended recipient as a beneficiary or joint owner. I further distributed the assets per his will and used the Small Estate process for what he had left. Items my brother placed in my name are legally a gift and I’ll be filing gift tax paperwork in his final return. Note that the Gift Tax is not a paid tax in Federal returns, but a reduction in your Estate Tax exemption. This is still a zero tax transfer since my brother’s estate was no where near that exemption. For what I further transferred, anything over the gift tax limit will eat into the portion of my Estate Tax exemption that is set to disappear in 2026. It’s low enough that it won’t materially affect me. If it’s extended and I manage to have my own $20MM estate there will definitely be trusts and distributions before I pass. Estate planning isn’t difficult. Find a good CFP and/or Estate Lawyer and speak with them. https://www.courts.ca.gov/10440.htm?rdeLocaleAttr=en https://www.courts.ca.gov/10440.htm?rdeLocaleAttr=en
- sowbug 3y ago
  Sorry for your loss, and glad you and your family got such good advice beforehand. (The ~$40,000 is based on the fee for a sadly typical $2.5 million SF Bay Area home, bought before the interest-rate hike.)
  - H8crilA 3y ago
    This law is brutal and completely illogical. It's the kind of shit I'd expect from a very recent mess-turned-democracy country. I wonder if it has been challenged in the SCOTUS.

by sowbug 3y ago

gpderetta 3y ago

If you have zero networth (or the networth would be less than the fees), can't they just disclaim your inheritance?

sowbug 3y ago
Yes, but maybe it's your family's home, where your now-orphaned kids have lived all their lives, and they might not want to have to move and change schools just to pay an attorney whose services they didn't want. Their guardian might be able to figure out a way to pay the mortgage and maintain their stability, if it weren't for the irrationally calculated probate fee.

Moto7451 3y ago

California also has processes that bypass probate depending on the net worth of the diseased. You should not be paying anyone $40K just for probate in California. There is a progressive fee schedule that would limit the costs of a $1MM estate to about $20K. If you really don’t want that property, just let the bank repossess it. You’re not required to do anything with it. If for some reason the house was not foreclosed on you would eventually be able to claim it from the state. Banks also have procedures for next of kin to take over mortgages while you sort this out, should you want to. My brother passed this year and I paid an attorney about $1000 for some very basic templated documents on a probate-less estate in CA. The key was setting everything (before passing!) to have myself or the intended recipient as a beneficiary or joint owner. I further distributed the assets per his will and used the Small Estate process for what he had left. Items my brother placed in my name are legally a gift and I’ll be filing gift tax paperwork in his final return. Note that the Gift Tax is not a paid tax in Federal returns, but a reduction in your Estate Tax exemption. This is still a zero tax transfer since my brother’s estate was no where near that exemption. For what I further transferred, anything over the gift tax limit will eat into the portion of my Estate Tax exemption that is set to disappear in 2026. It’s low enough that it won’t materially affect me. If it’s extended and I manage to have my own $20MM estate there will definitely be trusts and distributions before I pass. Estate planning isn’t difficult. Find a good CFP and/or Estate Lawyer and speak with them. https://www.courts.ca.gov/10440.htm?rdeLocaleAttr=en https://www.courts.ca.gov/10440.htm?rdeLocaleAttr=en

sowbug 3y ago
Sorry for your loss, and glad you and your family got such good advice beforehand. (The ~$40,000 is based on the fee for a sadly typical $2.5 million SF Bay Area home, bought before the interest-rate hike.)
- H8crilA 3y ago
  This law is brutal and completely illogical. It's the kind of shit I'd expect from a very recent mess-turned-democracy country. I wonder if it has been challenged in the SCOTUS.