Many people have little or no knowledge of how the probate process works in California. That often only changes when they finally decide to draw up a will, or, under sadder circumstances, someone close to them passes away.
There can be a temptation to bury your head in the sand when it comes to making a will or to consciously think about what will happen to your loved ones after you die. But the truth is that with a bit of foresight and estate planning now, you can make things much easier for your family when the time comes.
By drawing up a will, understanding how probate works, and learning about the alternatives to probate, you may not be able to lessen the pain of your passing - but you can certainly soften the blow practically and financially for your family. Read on to learn how.
Probate is both a simple and complicated process. If the deceased has a will, the court must rule that it’s valid and then appoint an executor. If the person died intestate (without a will), then the court selects an administrator. The executor/administrator must ascertain who the beneficiaries/heirs are and calculate the estate’s value. Having discharged any outstanding financial obligations, the executor/administrator can then distribute the deceased person’s assets to their beneficiaries/heirs.
That makes probate sound like a simple process, and in many respects, it is. However, it’s typically a lengthy procedure, averaging nine months from start to finish. Some cases may be resolved much more quickly. Yet, others can take far longer, especially if there are complications - such as no will, a contested will, a large number of beneficiaries, and many assets.
Though many people look at alternatives to probate for strictly financial reasons, others are simply keen to avoid the length of time that the process can take.
There are various fees associated with probate in California. Some are unavoidable, while others are optional. First, there are court fees - for example, initial and final distribution filing fees cost $435. Then there are charges for areas like newspaper listings alongside valuation and appraisal of assets.
Lawyer fees in probate are set by the state of California, with a sliding scale based on the estate’s value. It starts at 4% on the first $100,000, 3% on the next $100,000, 2% on the next $800,000, and 1% beyond $1,000,000. There may be additional charges if extensive work is involved.
Most times, probate works smoothly enough, but there are several potential hurdles. There can be long delays, excessive amounts of paperwork, court and lawyer fees can quickly add up, certain parties may challenge the will, and on occasion, the court might not agree to specific bequests in the will. For all of those reasons, many people look for ways to avoid probate in California.
When the value of an estate is small (less than $166,250), or when it has real estate worth under $55,425, you can avoid probate in California. There are other ways, too. What they all share is the need to be set up while the person is still alive.
A living trust is among the most practical and financially efficient alternatives to going through the probate process in many circumstances. It’s most definitely not for everyone, as it takes money and effort to set one up - but if you have a large or complex estate, it’s certainly worth considering.
With a living trust, it’s the trust, not you, that owns your assets. But as the trustee, you retain complete control of the assets, plus you can revoke the trust at any time. There’s no need for probate when you pass away because the trust, not you, owns your assets. When you die, the successor trustee simply replaces you as the beneficiary of the trust. Note that it’s possible to have both multiple trustees and beneficiaries.
The idea behind joint asset ownership is, essentially, that when one partner dies, their shared ownership of the asset automatically passes to the other partner. So if a husband and wife own a house, and one of them dies, then their share of the ownership automatically passes to the other, without the need for probate.
The great attraction of joint asset ownership is its simplicity, but you may find much better and more tax-efficient ways of achieving the same outcome. You should take great care when drafting joint asset ownership, as it’s vital to use the correct terminology.
A Transfer-On-Death (TOD) deed or registration is a quick, simple, and lower-cost alternative to a living trust. Compared to joint asset ownership, it also gives you much greater flexibility. With a TOD deed, your property automatically passes to the named beneficiary without the need for probate, and you also retain the flexibility to change beneficiaries easily. Just be aware that some shortcomings are associated with a TOD, such as the beneficiary becoming liable for the deceased’s unsecured debts.
If you’ve been named the executor for a complex will, the workload can soon become overwhelming. At that point, an experienced probate attorney can step in, share the burden, and speed up the process.
A trusted lawyer can also advise you on alternative approaches to probate, like living trusts. In such cases, always make sure you’re working with a reputable professional, as some untrustworthy operators are out there.
Regardless of where you’re at - writing your first will, estate planning, or already involved in the probate process - a dedicated legal professional can make your life a whole lot easier. So call our friendly and knowledgeable team: your free initial consultation includes expert advice and practical guidance on probate when planning for your future.