Probate can be a long, expensive, and time-consuming process. In California, probate can take anywhere from 9 months to over a year and can cost the estate a significant amount in legal fees and court costs. For these reasons, many people look for ways to avoid probate altogether, ensuring that their assets pass directly to their heirs without court intervention.
In this blog post, we’ll explore the most effective strategies for avoiding probate in California, including setting up trusts, joint ownership arrangements, and other probate-avoidance tools.
What Is Probate?
Probate is the legal process through which a deceased person’s estate is administered. The court oversees the payment of debts and taxes and ensures that remaining assets are distributed to heirs or beneficiaries according to the deceased person’s will or, if no will exists, California’s intestate succession laws.
While probate is necessary in some cases, it can be avoided if proper estate planning is in place. By using legal tools that bypass probate, your assets can be transferred directly to beneficiaries, saving time and money.
Strategies to Avoid Probate in California
1. Create a Living Trust
A living trust is one of the most powerful and commonly used tools for avoiding probate in California. In a living trust, you transfer ownership of your assets to the trust during your lifetime. You can act as the trustee, maintaining control of the assets, but upon your death, a successor trustee manages and distributes the assets according to your wishes.
How it works: Assets held in a living trust do not go through probate because they are no longer technically owned by the deceased person—they are owned by the trust.
Advantages: A living trust allows for the seamless transfer of assets, avoids court intervention, and keeps your estate matters private, as probate is a public process.
Tip: To fully avoid probate, it’s essential to transfer all significant assets, such as real estate, bank accounts, and investments, into the trust. Simply creating the trust is not enough; the assets must be retitled in the name of the trust.
2. Joint Ownership with Right of Survivorship
Certain forms of joint ownership allow assets to pass directly to the surviving owner without going through probate. In California, the two most common forms of joint ownership that can avoid probate are Joint Tenancy with Right of Survivorship and Community Property with Right of Survivorship.
Joint Tenancy: When two or more people own property as joint tenants with the right of survivorship, the surviving co-owner automatically inherits the deceased owner’s share without probate.
Community Property with Right of Survivorship: This form of ownership is available to married couples in California. When one spouse dies, the surviving spouse automatically inherits the other spouse’s share of community property without the need for probate.
Tip: Ensure that your property title explicitly states “right of survivorship” to avoid probate. If the title does not include this language, the asset may still go through probate.
3. Payable-on-Death (POD) Accounts
A Payable-on-Death (POD) designation is a simple way to avoid probate for bank accounts. By adding a POD designation to your checking, savings, or certificate of deposit (CD) accounts, you can name a beneficiary who will automatically inherit the funds upon your death.
How it works: After your death, the beneficiary you named on the account can claim the funds directly from the bank without going through probate. The bank requires proof of death and identification from the beneficiary to release the funds.
Tip: Ensure that your POD designations are up to date, especially after major life events such as marriage, divorce, or the birth of children.
4. Transfer-on-Death (TOD) Designations
Transfer-on-Death (TOD) designations work similarly to POD designations but are commonly used for brokerage accounts, stocks, bonds, and other securities. You can name a beneficiary who will inherit these assets without going through probate.
How it works: The named beneficiary automatically takes ownership of the account or securities after your death, bypassing probate.
Tip: Not all states allow TOD designations for real estate, but California does allow a Transfer-on-Death Deed for real property, such as your home. This can be an effective way to transfer real estate directly to your beneficiaries without probate.
5. Small Estate Affidavit for Estates Under $184,500
California allows for a simplified probate process called a small estate affidavit for estates valued at $184,500 or less (as of 2024). This process bypasses formal probate court proceedings and allows beneficiaries to claim assets using an affidavit.
How it works: If the total value of the decedent’s assets subject to probate is under $184,500, beneficiaries can submit a small estate affidavit to claim the assets. This avoids the need for court oversight.
Limitations: This method is only available if the estate falls below the value threshold and only for certain types of assets.
Tip: Not all assets are counted toward the $184,500 limit. Non-probate assets, such as those with beneficiary designations or held in a living trust, are excluded from the calculation.
6. Beneficiary Designations
Many financial assets allow you to name a beneficiary, ensuring that the asset passes directly to that person upon your death, avoiding probate entirely. Common assets with beneficiary designations include:
Life insurance policies
Retirement accounts (401(k), IRA, etc.)
Annuities
Health savings accounts (HSA)
Tip: Regularly review and update your beneficiary designations to ensure they reflect your current wishes, especially after life changes like marriage, divorce, or the birth of children.
Benefits of Avoiding Probate
Time savings: Probate can take several months to over a year, but non-probate assets can be transferred to beneficiaries much faster.
Cost savings: Avoiding probate can save your estate significant legal fees, court costs, and executor fees.
Privacy: Probate is a public process, meaning that anyone can access the details of your estate. Using probate-avoidance strategies helps keep your financial matters private.
Control: You can structure how and when your assets are transferred to your beneficiaries, especially if you use tools like living trusts or beneficiary designations.
Conclusion
Avoiding probate in California is achievable with proper planning and the use of tools like living trusts, joint ownership, and beneficiary designations. By taking these steps, you can ensure that your assets are transferred smoothly, saving time and money for your loved ones. Working with an experienced estate planning attorney is crucial to ensure that all your assets are properly titled and that your estate plan reflects your wishes.
If you’re ready to start planning your estate or want to ensure your current plan will avoid probate, consult with a California estate planning attorney who can guide you through the process.
This blog post explains how to avoid probate in California using living trusts, joint ownership, payable-on-death accounts, and other strategies to help you ensure a smooth transfer of assets to beneficiaries.
Contact Us for Legal Help
If you have questions about estate planning and estate taxes, a California probate, your responsibilities as a Trustee, or how to properly administer a California trust, contact the top-rated California trust and probate attorneys Moravec, Varga & Mooney – today to schedule a telephonic consultation. Have questions, call (626) 460-1763 or email LV@MoravecsLaw.com.
Southern California Probate Lawyer Serving all counties in California, including Los Angeles, Riverside, San Bernardino, Sacramento, Santa Cruz & Beyond.
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