It may be a difficult subject to navigate, but when it comes to estate planning, there are certain steps you should take now to avoid probate. Probate—the court proceedings that transfer ownership of an estate from the decedent to their benefactors upon death—is a timely and costly process that can take a toll on grieving families. Probate can also be incredibly confusing and take months or years to sort out. And because it is a court proceeding, it becomes public record. The good news is, depending on your assets, there are several things you can do to avoid probate proceedings. Here are five ways to avoid it in California:
Go Beyond the Basic Will
You may have already established a basic will, but this alone does not cut it as far as avoiding probate. California family and estate law can be complicated; wills must go through the probate process, and one way to get around that is to establish a revocable living trust. Living trusts can cover most assets, such as real estate, bank accounts, jewelry, and vehicles. A revocable living trust serves as an alternative to the will, essentially placing your assets “in trust” to an appointed successor—and by appointing yourself as the primary trustee, this allows you to keep control of your estate until death. This is particularly helpful if you plan to divvy out property or assets to beneficiaries while you are still alive. And if you have a spouse, you can also set up a living trust together as co-trustees.
To get started with a living trust, you simply create a “declaration of trust,” and then designate a successor trustee to take over after death. A pro tip: be sure to talk to your estate planning attorney about taxation—as we all know, taxes are one of the primary certainties in life, and knowing how and when to pay these while planning your estate will help you and your beneficiaries know what to expect.
Did you know that living trusts can also work in tandem with wills? Depending on your needs, consider combining the two into a testamentary trust.
Consider These Payable on Death Designations
California has certain types of payable-on-death designations that allow your beneficiaries to automatically inherit your estate after your death. These can be easy to file, and can bypass the need for probate if done properly:
- Payable on Death (POD) Designations allow you to appoint a beneficiary to receive monetary assets from your bank accounts, as well as things like bonds, and certificates of deposit.
- Transfer on Death (TOD) Designations are similar to PODs but deal primarily with real property. This includes assets such as real estate and vehicles.
With both POD and TOD designations, it is important to keep in mind that none are payable until death—and if the beneficiary dies before the primary benefactor, it must be updated to avoid probate after the fact.
Joint Tenancy in California
Owning property in and of itself can be a complex matter. You want to make sure that your real estate, land, and legacy are left in good hands. In California, there are many ways to hold property, with a few of them helpful in avoiding probate. One of the most common options is to hold it in joint tenancy. This means that you have equal co-ownership of your property with one or more persons—and they will automatically inherit your share of these assets after your death under rights of survivorship, no probate needed.
Community property with rights of survivorship is very similar to joint tenancy, but it is only valid for your spouse or registered domestic partner; no other benefactors may inherit your property under this filing. Under community property, you and your spouse or partner each own one half of the property, with your half automatically going to them upon death.
Tenancy in common is another way to hold ownership of California property. The primary difference is that two or more people can hold shares, they do not have to be related to each other, and each person can have varying percentages of ownership at different times. Tenancy in common is more complex than joint ownership and community property, as it does not allow the rights of survivorship—the co-owners do not automatically receive your shares upon death. Speak with your estate planner to see which solution is best for you.
Take Advantage of Small Estate Procedures
Your real and personal property can be quickly distributed to your beneficiaries without probate proceedings if the state deems it to be a “small estate.” In California, an estate valued at $166,250 or less may qualify for a speedy, simplified probate case.
How does it work? Your beneficiary will prepare a small amount of paperwork and sign an
affidavit under oath, and then wait a short time before the assets are released to them. However, depending on your state regulations (and where your property is located), not all assets count towards the monetary limit. The easiest way to find out if your estate will be covered under this umbrella is to consult with your lawyer as you adjust your will or living trust.
While the small estate option may be excellent for many Californians, it’s not for everyone—especially if you own a large business, agriculture and land, or own properties in other states. Not sure if your assets qualify as a small estate? You can always contact the estate planning experts at Lowthorp, Richards, McMillan, Miller & Templeman, APC to answer your questions.
Find the Best Solution for Your Needs—and Don’t Procrastinate!
The last thing you want for your family is for them to go through a complex and lengthy probate process after your death. Probate court proceedings can be incredibly expensive and ultimately lower the value of your estate. With proper planning and a solid living trust in place, probate can be avoided. Start planning your estate now, so you and your loved ones won’t have to stress about it later.
Above all, it’s crucial to make sure that you have met all the legal and state requirements to transfer your estate the right way. It can be difficult to navigate, and you’ll want to ensure your plans are free of costly errors. The best way to do this is to contact an estate, trust, or family lawyer. We can help! Our attorneys live and practice in the tri-counties of Ventura, Santa Barbara, and San Luis Obispo. We offer a full suite of trust and estate legal services for our clients, and we also specialize in other areas of law such as business and civil litigation, injury law, wrongful death, flood & fire, and land law—just to name a few.
Our team would love to help you make the best estate plan possible. We know that every situation is unique—and we look forward to finding the best plan for you, your family, and your family’s business. Give us a call at 805.981.8555 or fill out our contact form today.