This article is not a substitute for, nor does it constitute, legal advice. Only an attorney who knows the details of your particular situation can provide you with legal advice.
Avoiding Probate- A Quick Primer
Probate is a state-mandated, expensive, time-consuming, and tedious process that many estates have to go through before any of the estate is distributed. Probate in California usually takes months and the administrative costs are frequently in the tens of thousands of dollars. Understandably, most people wish to avoid probate for exactly these reasons. The nominal protections offered by having a court oversee the implementation of one’s will and/or trust is rarely worth the administrative burdens of probate. So how do you go about avoiding probate?
Wills
Contrary to popular belief, wills in California frequently go through probate. Why? Usually either due to a challenge to the will or the size of the estate automatically begins the probate process. In California, if the overall value of an estate is greater than $100,000, or the value of any real property in the estate is greater than $20,000, then the will must go through probate. The probate court does not take any debts into consideration when valuing the estate. Avoiding a challenge to a will can never be guaranteed but the chance that a will is challenged can be minimized by a well-drafted will with a “no-contest” clause. But how do you avoid the $100,000 cut-off?
Living Revocable Trusts
Living revocable trusts do not go through probate. While most, if not all, trusts avoid probate, we will focus on the living revocable trust here. By creating a living revocable trust, you can avoid probate, still manage and access the assets in your trust, include a successor trustee in case of incapacity (see previous blog post), and your plans for your estate will remain private. You cannot avoid estate taxes with a living revocable trust, nor are living revocable trusts immune from trust contests. Still, you avoid probate and your assets go where you intended.
Joint Tenancy
Owning real property in a joint tenancy can allow you to avoid the probate of that property. A joint tenancy is a type of property ownership where two or more individuals own an equal share of the property with a right of survivorship. What that means is when one person dies, that person’s share passes to the remaining joint tenants. However, once the joint tenancy ends (when only one tenant is left alive), the remaining individual owns the property in fee simple and the property can go through probate.
Other States
The probate rules vary from state to state. While California puts a will that bequeaths an estate of more than $100,000 through probate, the actual dollar value that triggers probate is different in other states. If you have an out-of-state will then different rules may apply.
As always, before making any changes to your estate plan you should consult your local estate planning attorney to make sure you are doing what’s best for you and your loved ones.
The entirety of this article is copyrighted by Grant A. Toeppen, Esq., © 2012. Please send an email to Grant@ToeppenLaw.com if you would like to use this article in part or in its entirety.
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