Many people aren’t aware that probate is something that has to happen after a person passes away, before their estate can be distributed to their heirs. It’s a complicated process that is supervised by the court and can often drag on for a year or longer here in California, all while amassing expensive fees and charges that deplete the wealth that the decedent worked tirelessly to earn and be able to leave for their heirs.
Because there are so many drawbacks to the probate process, ideally you should keep your estate out of probate during your lifetime and save your loved ones from the stress it causes. Through careful estate planning, it is entirely possible to pave the way for your estate to avoid probate after you pass and ensure a swift and efficient transfer of your assets to your family!
In this blog, we will help you understand the California probate process a little better and then reveal the 3 proactive steps you can take to keep your estate out of probate and safeguard your legacy!
Probate In California At A Glance
Unfortunately, far too many people believe having a will alone protects their estate from probate, but this isn’t true, even though a will does allow for a much more straightforward probate process. When a person passes with no estate plan, or only a will, probate must occur before assets can be divided and distributed.
If a person passes with no will or trust, they are considered to have died “intestate,” and their property is distributed according to California’s laws of intestate succession.
In some rare cases, California permits “small” estates to pass directly to heirs and avoid probate if they are under a certain value ($184,500 currently) by utilizing a small estate affidavit; however this does not apply to transferring real property (like a house, building, or land).
Someone – typically a family member – must oversee the probate process and serve as the estate executor or administrator. This individual has many responsibilities, including:
- Determining whether the decedent’s estate needs to go through probate
- Filing the will with the court in the county where the decedent lived
- Filing a petition for probate
- Answering any questions about probate administration
- Explaining legal options in clear language
- Providing personalized legal advice regarding probate administration
- Taking inventory and appraising the decedent’s assets
- Providing written notice to the will’s beneficiaries and creditors
- Obtaining affidavits and declarations from attesting witnesses
- Negotiating debts with creditors
- Filing an estate tax return and paying estate taxes (if applicable)
- Distributing assets to heirs and beneficiaries
- Preparing a final accounting
- And more.
Serving as an executor or administrator is a significant responsibility, especially for someone who is in mourning and also juggling their own personal obligation. There is also the possibility that complications could arise, such as will contests or other lawsuits, which can prolong the probate process and make it even more challenging.
In essence, while probate isn’t inherently “bad,” it is complex and burdensome enough that it’s worth following steps to help your family avoid it when possible.
Step 1: Establish A Trust
Storing assets in a trust is perhaps the most surefire way to keep them out of probate. Trusts are financial entities separate from your estate to which you can transfer your assets so they can be managed for the benefit of your heirs. Trusts are not subject to probate, so all the delays, expenses, and publicity of probate can be avoided.
There are many different types of trusts that can be utilized in special circumstances, such as if you have a beneficiary with special needs or one that has not historically handled their finances well. Some examples of different trusts include:
- Revocable living trust
- Irrevocable trust
- Special Needs Trust
- Charitable trust
- Spendthrift trust
- Asset protection trust
- And more.
Step 2: Use Beneficiary Designations
There are many financial assets that pass outside of a will, such as life insurance benefits, retirement benefits, investment accounts, and more. Designating a beneficiary to these assets allows ownership to be easily transferred, without the need for probate. It is in your best interests to not only name a primary beneficiary (the person first in line to obtain funds), but also a secondary or “contingent” beneficiary (the person who should obtain the funds if the primary beneficiary is deceased).
A special note about beneficiary designations: it is important to remember that these designations only change at your discretion. So, should you go through a divorce, have a death in the family, or experience a falling-out with a loved one which impacts your current designations, they must be updated to reflect your new wishes.
Step 3: Title Property Jointly With Rights Of Survivorship
Joint tenant with the right of survivorship is a legal structure where two or more parties share ownership of a financial account or other assets, and which allows a person’s share to automatically pass to the surviving co-owner(s) when they pass. A JTWROS can only be established if the owners agree to acquire the property at the same time, have the time title on the asset, and have an equal share in the property.
Utilizing this legal tool will keep the property or asset out of probate, but it is worth mentioning that it does not allow ownership to be transferred to the deceased individual’s heirs – only the surviving co-owner(s). It is commonly used between married couples or between a parent and their child, and can involve any number of financial assets such as real estate, bank accounts, mutual funds, brokerage fund accounts, and more.
BONUS Step! Working With A Seasoned California Estate Planning Attorney Is The Key To Successfully Avoiding Probate. Contact Equal Justice Law Group Today To Learn How We Can Help You Reach Your Goals!
Still have questions or concerns about your estate and how you can guarantee your loved ones won’t have to endure probate? Let us help! Estate planning can be an intimidating subject for many, but with the right law firm on your side, it can be a fairly straightforward process.
Our lead attorney, David Foyil, has nearly 30 years of experience in helping Californians achieve their estate planning goals. He takes the time to get to know you, your family, and your unique financial situation, so he can recommend the most robust strategies. We believe in inviting you into each step of the process, never keeping you in the dark or trying to confuse you with confusing legal jargon. Everyone deserves to feel confident in their future!
Call today to request your initial consultation and learn more about your options and how we can serve you.
