When a loved one dies, the last thing most people want to do is go through probate. Probate is a process where assets are passed from the deceased person (decedent) to their beneficiaries according to their will if they have one.
If not, the property is distributed to certain individuals as provided by California law. It usually involves several steps such as paying debts owed by the decedent.
Probate can be expensive and time-consuming. It can also take years before it’s settled. Why not avoid probate altogether. How do you avoid probate?
In California, you have three options: joint tenancy with right of survivorship, living trust, or beneficiary designations. Let’s talk about what probate is and why you might want to avoid it.
What is Probate in California?
When someone dies in California and they own property solely in their own name, a Probate Proceeding may be required. The primary goal for a probated estate is ensuring all financial obligations have been met before property is distributed among heirs/beneficiaries as provided by California law.
Probate is the process of collecting the decedent’s assets, paying their final debts and expenses, and distributing the remaining balance of the property to their children, heirs, or other persons that they designated in their Will if they had a Will. The whole process is supervised by the court and governed by the laws of California.
Why is Probate Required?
If you want to avoid Probate, it is important to understand why the process exists in the first place. Essentially, Probate is required to distribute assets that are no longer owned by a natural person. If you die owning that property solely in your own name, after your death, you no longer own that property.
In fact, nobody owns that property. Therefore, a probate will be required to appoint a person to take ownership of that property, so that somebody can own that property again.
That person is called the “Administrator” of the estate. The legal name for that property is called the decedent’s “Probate Estate.”
People commonly own property solely in their own name. Let’s say, for instance, you open a bank account in your individual name, or you buy a house and take title to the house under your individual name.
If the property is owned this way at the time of your death, and it exceeds a certain value, a Probate proceeding will likely be required.
How Can You Avoid Probate?
The only way to avoid probate is to not own any property solely in your name at the time of your death. Or, technically, if you do own property in just your own name, to own less than or equal to $166,250 (as of January 1, 2020) at your death.
Property that is not included in your probate estate includes:
- property that is owned jointly with another person or other persons,
- property owned in joint tenancy,
- property that has a named beneficiary designation (such as life insurance, IRA, or TOD/POD beneficiary designations),
- or property owned by the trustee of a trust.
You should be aware that joint ownership, trust, and beneficiary designations all have nuances and are not necessarily the best way to own that property. The best way to own property depends on your unique situation.
Does a Will Avoid Probate in California?
If you execute a Will, it does not avoid probate. A Will governs all of the property owned in your Probate Estate at your death.
A Will states who gets what property when one passes away and how their assets should be distributed upon death. If, for instance, you have two children, but you want to leave all of your property to your friend Fred, you can do that through your Will.
A well-written will also ensure that if there are any debts attached with your legacy (whether money owed from someone else like friends or family members) those obligations would still need to be paid off. But the Will still needs to be deposited with the Court for use in connection with the Probate proceeding.
You can also use the Will to inform the Court who you want to be the administrator of your Probate Estate. The person you choose to be the administrator is your Executor.
What Happens During a Probate Proceeding?
The process of a probate proceeding is not just about designating an owner for property that was once owned by someone who has died. It’s also about the other affairs and debts left behind, like finding out if there are people or entities owed money from this person–maybe they owed unpaid hospital bills to one entity and taxes to another.
The Administrator must notify all creditors known before death so these obligations can be dealt with accordingly while maintaining as much dignity in handling their life after passing away. The Administrator is required to notify all of the known creditors of the person who died.
But what about the unknown creditors? The Administrator is required to publish a notice in a newspaper of general circulation in the county where the person died to inform people and other potential creditors that the person died and that they have only a certain amount of time to make a claim against the estate for the unpaid monies due to them.
How Long Does Probate Take in California?
The Probate period can be a burden on the deceased person’s beneficiaries. A Probate Proceeding generally takes 1 – 2 years from start to finish.
This can be a problem because generally the property is tied up during that time. I have seen first-hand the burden that is placed on a deceased person’s family members and beneficiaries because they are not able to have access to the money or property during the lengthy Probate Administration period.
In addition, the process of Probate Administration is complicated and expensive. If you choose to hire an attorney to assist you through the process, it is likely to become even more costly.
Are There Any Benefits to Probate?
There are some benefits to Probate. First of all, creditors only have a certain period of time to file claims against the estate.
This provides some assurances that nobody can randomly pop up later and make a creditor’s claim against the estate. Second, the court oversees the whole process, which can be vital if one believes that their children (or heirs) are not capable of acting impartially towards each other or are not responsible enough to handle the administration of the estate on their own.
Final Thoughts on Probate
Probate is the court-supervised administration of a deceased person’s estate. Probate is required if the value of the Probate Estate is greater than $166,250 (as of January 1, 2020).
During the Probate Administration process, the Court will appoint a person to take ownership of the deceased person’s property, pay the deceased person’s final expenses and creditors, and distribute the remaining property to the heirs of other persons designated by their Will if they had a Will. One can avoid probate by owning property jointly with another person or other people, putting their property into a trust, or naming beneficiary designations on their property.
Last, Probate is costly, complicated, and time-consuming, but there are certain benefits such as cutting off future creditor’s claims and having the Court oversee the whole process.
If you want your loved ones left behind to avoid probate, make sure your property is owned in other ways besides just in your own individual name. If you’re looking to learn more about this topic or would like help with your own estate planning documents email or call me!