One common mistake Californians make is to assume a will is enough to avoid probate. But probate is actually required to administer most wills.
If your goal is to avoid what can be a costly and time consuming process, a living trust may be an essential tool to consider during the estate planning process. In this post, we examine how the value of an estate and type of ownership affect whether probate is necessary.
Estimating the value of an estate
Smaller estates (valued at less than $150,000) may not need to go through formal probate. In these cases there still may be forms to file with the court, however.
After the loss of a loved one, you need to take an inventory of the property remaining in the estate. Consider the following types of property:
- Real estate - a home owned free and clear of a mortgage or a vacation property
- Personal property - a jewelry or art collection
- Retirement benefits paid over to the estate
- Liquid assets in a checking or savings account
Are there exclusions? Yes, the list includes a motor vehicle, property located outside of California or a portion of an unpaid salary to name a few.
Property owned in joint tenancy with a spouse would not qualify as it automatically passes following death. But, we need to include a warning here. Before placing all property in joint tenancy, consider that this may effectively halve the amount of assets you can pass to children before triggering the estate and inheritance tax.
Any property held in trust is also excluded, but does not affect the lifetime gift cap in the same way.
Consulting an attorney who focuses on estate administration can aid you in estimating the value of an estate in order to determine whether probate is necessary. The threshold is quite low meaning any estate that includes coastal property or a sizeable investment portfolio will need to go through probate if advance planning was never completed.
Probating an existing will
As discussed in our introduction, if your loved one left a will, probate is necessary to administer the estate. The first step in the process is to bring the will to the probate court clerk's office within 30 days of the death. A copy needs to be sent to the named executor or personal representative.
Speaking with estate administration lawyer Matthew C. Yu is a good next step. The California probate court has specific requirements. Fail to follow them or make a mistake and one year could turn into two or three. Learn how our team can take some of the weight off your shoulders and keep the process on track.