Avoiding Probate of a California Estate

When an individual passes away in California, their assets and debts are administered according to any estate plan adopted by them during their life and, as applicable, California law. However, if the individual left only a will or had no testamentary instrument at all, such as a trust, the estate is administered through the probate process in accordance with California law. Probate is the court supervised administration of a decedent's estate, which encompasses asset distribution and estate settlement.

Probate can be a long, expensive process that most seek to avoid due to the time and expense involved. A large probate estate with many assets and debts to sort through can take years and cost tens of thousands of dollars, if not more. Fortunately, there are several available options to help your assets stay out of probate court instead of potentially putting this burden on your family members upon your passing.

Living Trusts

California law allows you to hold almost any asset you own in a living trust. Common assets such as real estate, bank accounts, and vehicles can all be held in a living trust. A living trust is created with a trust document, initially naming yourself as the trustee, then someone else as a successor trustee. This person will take over as trustee upon your death. The successor trustee can then transfer trust assets to the beneficiaries at that time without mandatory probate court proceedings.

Living trusts are an excellent option to properly set forth one's goals with respect to administration and distribution of the estate. Disputes may arise if one's intentions are not properly documented, which can potentially deplete trust assets and add years to an otherwise streamlined administration.

Revocable Transfer on Death Deeds

A transfer on death deed, which is also referred to as a beneficiary deed, transfers property to a designated beneficiary. A transfer on death deed, much like a living trust, is revocable meaning that the grantor can change their mind during their life time. Nonetheless, the transfer on death deed is used to transfer property to a chosen beneficiary at death without the property triggering the probate process.

Beneficiary Designations on Accounts

Beneficiary designations are a convenient way to transfer assets directly to a named beneficiary. Such designations may, in some instances, take precedence over conflicting terms of a will or trust. A will or trust purporting to transfer a beneficiary designated asset can lead to litigation. Common situations where beneficiary designations are used include the creation of a financial account, retirement account, or life insurance policy. Beneficiary designations should be reviewed every so often and upon significant life changes, such as divorce or remarriage, to ensure they are still consistent with your estate planning goals. A unique aspect of beneficiary designations is that, instead of an individual beneficiary, you can name your trust or estate as the beneficiary. As such, the asset becomes a part of your trust or estate at death and will be distributed accordingly.

Joint Ownership of Property

Jointly owned property carries a "right of survivorship." Jointly owned property is also regarded as a joint asset and does not go through probate. Instead, it automatically transfers to the surviving owner when one owner dies. California law recognizes two types of joint ownership:

Joint Tenancy. Two or more owners, also known as joint tenants, own equal shares of the property. If one owner dies, the property automatically legally passes to the remaining owners. Any joint tenancy agreement includes the right of survivorship. If there are no surviving owners, the property will pass through probate procedures.

Community Property with Right of Survivorship. California is a community property state, which means that all assets acquired during marriage are owned equally by each spouse. The only exception is if there is a will or other document that directs the property be transferred elsewhere. Community property with a right of survivorship will automatically pass to the survivor if the other dies.

Questions About Probate?

The probate process, along with your options for avoiding it, can be daunting. Moreover, for most, having a comprehensive estate plan is often placed low on the priority list. However, having certain legal provisions in place can make things much easier and less expensive for your family upon your passing. Our firm has advised numerous clients on estate planning choices and we are here to help. Please call The Law Offices of J. Scott McAninch at (805) 588-2824 or contact us online at www.mcaninchlaw.com.

Disclaimer: This post is one in a series of business, real estate, and estate planning prepared by the Law Offices of J. Scott McAninch. This publication is not exhaustive nor is it legal advice. You should discuss your unique situation with us or with your attorney. Our representation is only undertaken through a written fee agreement and not the distribution or use of this Publication.