The probate process involves gathering and distributing the assets of an estate under court supervision. Because of its lengthy, costly reputation, many individuals take steps to avoid the probate process with careful estate planning.
These strategies can help you prevent your estate from requiring probate in California.
Create a living trust
When you establish a living trust, assets you transfer into that trust are exempt from probate. Simply name your desired beneficiaries to the trust. When you die, the executor of your estate can transfer the assets to the beneficiaries outside of the probate process.
Establish a payable-on-death bank account
Certain types of bank accounts allow the owner to create a payable-on-death provision. With this so-called POD arrangement, the bank will transfer the proceeds of the account to your named beneficiary upon notification of your death.
In California, bank and investment accounts with a named beneficiary do not require probate. This option may also be available for pension plans, life insurance policies, retirement accounts and other investments such as stocks and bonds.
Own property with your beneficiary
Whether your desired beneficiary for a particular asset is your spouse or another loved one, you can avoid probate by naming him or her as a joint owner of that asset. For example, if you and your spouse are both on the deed to your home or a vacation property, he or she will automatically receive sole ownership if you become deceased.
Estates in California are subject to probate when they exceed $150,000. Smaller estates may be eligible for a simplified probate process in which the court allows beneficiaries to claim inherited assets by filing a court affidavit. In calculating the $150,000 threshold, the court excludes the value of property owned jointly, real estate located outside of California, life insurance benefits, payable-on-death accounts, motor vehicles, assets held in a living trust and outstanding wages up to $15,000.
When you plan your estate, you have the peace of mind of knowing you can care for your family after death. Correct legal documentation can prevent a long, expensive court battle.