Following a death, you may find yourself looking for guidance about how to deal with all of the “stuff,” all of the estate assets. Sometimes it is easy to deal with the small things. Your daughter gets dad’s guitar and your son gets dad’s carved mahogany bar, done and done. But who gets the lake house and who takes over the stock portfolio? How do I change legal title to these assets so I can manage them as trustee or executor? If these items are in a trust, the answers should all be in a properly prepared trust document and it should not be necessary to involve the California Superior Court in the administration of the trust estate. But if dad died without a trust, or he died with assets not held in trust, and the value of his probate estate was over $100,000, you may need to start a probate proceeding to receive court authority to manage the probate estate.
How do you value dad’s estate? Normally the following assets are considered part of the decedent’s probate estate and are subject to the probate process:
- All of the decedent’s separate property, generally assets in the deceased person’s name alone acquired outside of marriage or inherited during marriage;
- One-half of the decedent’s community property (generally, property acquired during marriage);
- The deceased person’s portion or share of an asset where the asset is titled as tenants in common with others;
Assets not Subject to California Probate
However, not all assets under the decedent’s control at the time of death are subject to probate. California law provides that a probate of an estate is not necessary if the total value at the time of death of the assets, which are subject to probate, does not exceed the sum of $150,000 (as of 2012). There is a simplified procedure for the transfer of these assets. The $150,000 figure does not include vehicles and certain other assets. Furthermore, the following assets are not subject to the probate process:
- Assets held in a revocable (living) trust;
- Assets held in an irrevocable trust;
- Assets properly transferred out of the decedent’s estate prior to death (i.e. lifetime gifts, GRATs, QPRTs, etc.);
- Assets held in joint tenancy with another person or persons;
- Assets such as life insurance and IRA benefits, where a beneficiary is named;
- Assets held in the deceased person’s name as “trustee” for the benefit of another;
- “Payable On Death” (P.O.D.) or “transfer on death” (T.O.D.) accounts;
- Assets passing to the surviving spouse. An exception to this can arrise if an institution, like a bank or a title company, refuses to transfer control of assets to the surviving spouse without Letters Testamentary or Letters of Administration having been issued by the probate court. In the right circumstance, California has a simplified procedure referred to as a “spousal confirmation proceeding” that can avoid the necessity of a full probate proceeding. Generally, a petition is filed with the court, notice is given to certain parties, and if there are no objections, the court orders the transfer of assets.
Avoiding California Probate
As discussed in a prior post, probate can be expensive and time consuming. You will note that moving your assets into a revocable trust, an irrevocable trust, a properly executed CRT, GRAT or a QPRT can be a great way to avoid subjecting your family to the time and expense. Furthermore, these tools can also help you reduce your exposure to the federal estate tax. We are available to discuss your situation at 415-781-4000.