In my last post on California Probates I went over several reasons why the probate system in California is not the preferred way to transfer wealth to your beneficiaries. Even with those shortcomings, many people choose not to do any planning during their lifetimes and they instead decide to either pay for a simple will that follows the statutory formalities or to do a holographic will (a will entirely in that person’s handwriting as authorized under section 6111 of the California Probate Code). The main reasons for this is that they either do not want to spend the money during their lifetimes or they feel that the problems with the probate system will be changed before they pass away. Either way, those people are continually looking for ways to improve their personal representative’s experience during the probate process. Here are a couple of issues for a person to consider when they are doing their simple will or a will in connection with a comprehensive estate plan.
First, as noted previously, many judges will honor a decedent’s request to waive bond if they explicitly indicate this in their will. The individual must waive bond for any of the named personal representatives to act. This will in many cases eliminate the need for the estate to spend thousands of dollars per year on an insurance policy that is not needed in many of the estates. Otherwise, if the bond is not waived, the court will generally require the bond and if the estate cannot pay for this cost, then assets will need to be sold in order to satisfy the payment. I have also seen a judge require a bond in a probate where the will explicitly waived bond. The reason in that specific case was that none of the named individuals in the will wanted to act, so they either had a different relative act in that capacity or a public fiduciary was appointed by the Court. Either way, the judge decided that the will only waived bond for those specific named individuals, so make sure that you name enough alternative personal representatives to make sure that one will act. Also, you will want to make the bond waiver language extremely broad if you want the Court to waive the bond.
Second, in California there is a section of the Probate Code beginning with section 10400 that is called the Independent Administration of Estates Act. This section allows a personal representative to do many things during the administration of the estate without going to court for approval on each individual action. At the end of the probate when the final petition is filed, the representative must disclose what actions were taken under these powers, but as long as the representative acts within the powers under these sections, the result is that the entire process takes much less time (especially in those counties where there is only one probate court that handles a great number of probate cases, such as Orange County). The probate code indicates that any personal representative can petition the court for these powers unless the will indicates that the estate may not be administered pursuant to these provisions (California Probate Code section 10404). However, my personal experience has shown that some judges will not allow these powers to be used unless the decedent gave express authority to administer the estate under these provisions in their testamentary will. The only potential downsides are that your personal representative can take actions under these provisions without immediate Court approval (so make sure you pick a trustworthy person for your personal representative!), and some judges will only allow these powers to be granted if the personal representative posts a bond, thereby allowing more flexibility but increasing the expenses to the estate (I haven’t experienced this in Orange County, only in Los Angeles County). Therefore, if you want your personal representative to have the most flexibility, your will should expressly authorize all of the listed personal representatives to act under the Independent Administration of Estates Act.
In closing, please note that if you are concerned about security over flexibility for your heirs then you may not want to waive bond and you may not want your personal representative to have the independent administration powers. In my experience with the estates that I have handled, the clients overwhelmingly want more flexibility than more security when they understand what the bond costs and how the independent administration can speed up the process. However, there are many situations where there are family conflicts and issues that parents can foresee between the beneficiaries. In these situations a bond and requiring the longer Court procedures may be the best option available. If you have further questions about how these decisions can affect your estate and your family, contact your attorney to discuss the matter or email me at firstname.lastname@example.org or email@example.com.