Will the Estate Need to Be Probated?
After the death of an estate holder, families often wonder whether the estate assets will need to proceed through the California probate court system before final distribution of assets. If the family has taken some basic legal steps ahead of time, there are alternatives to probate that can save heirs and beneficiaries a great deal of money, time and emotional turmoil.
Spousal Property Petitions
California is a community property state. Spouses share in joint ownership of property accumulated over the duration of the marriage. Upon the death of one spouse, the estate may be transferred to the surviving spouse without the necessity of probate. However, the right to automatic succession to property depends on many issues, including the character of the property as community or as separate property of the deceased spouse. Having to go through a probate or administration of the estate is an expensive and time-consuming process, which usually is unnecessary. It is also possible for the property of a deceased spouse to be transferred to a surviving spouse by means of a simple declaration if the value of the property is less than $150,000.
People have the option of holding the title to real estate in many ways. In a joint tenancy, there is a right of survivorship. Married couples often hold title to their property as joint tenants and sometimes as community property. Typically, it is best if married couples do not hold title to their real estate as tenants in common. When a tenant in common dies, there is no automatic right of survivorship and it may be necessary to probate or administer the estate through the courts. It is important to hold title to your real estate in a manner that is consistent with your coordinated estate plan. Failure to do so could be extremely costly and time-consuming for your beneficiaries.
Revocable Living Trusts
A living trust is a legal document that includes your instructions on what you want to happen to the assets in the trust when you die or become incapacitated. Unlike a will, a living trust is a private matter and avoids a court-supervised action such as a probate or administration of your estate. Because the trust is the technical legal owner of your assets, when you die, those assets don't become part of your "estate." Assets that are part of your estate may need to be transferred by a court-supervised probate or administration. Just the attorney fees alone that are required to be paid in the probate of a modest home with a gross value of $400,000 are $11,000! By comparison, the cost to transfer that same home through a trust would be approximately $2,000, a savings of $9,000! For people who have an interest in a home or other real estate, it makes no sense to not have a living trust.
Payable-on-Death and Retirement Accounts
Payable-on-death accounts (POD accounts) have a beneficiary named on the account. Upon the death of the account owner, the financial institution will pay over the proceeds of the account to that named beneficiary. Similarly, retirement accounts such as IRAs and 401(k)s usually have a beneficiary named and those accounts will be paid over to the beneficiary without court administration. If a beneficiary was not named, then the account is payable to the Estate of the decedent and a probate may be necessary. But payable-on-death accounts are not a substitute for a well thought out and drafted estate plan, especially if there are beneficiaries under the age of 18 because a minor cannot receive and own these proceeds. Without a trust, a guardianship of that minor's estate may be necessary.
Make a Gift of Your Estate
Prior to your death, you may outright gift the assets in your estate holdings to a designated beneficiary other than your spouse. Many elderly couples gift their estate assets to their adult children, as a means of eliminating their assets to qualify for the Medi-Cal long-term care benefit. The requirements for gifting assets from your estate to qualify for Medi-Cal are very technical and mistakes can create a period of ineligibility. Additionally, if a person receives the Medi-Cal long-term care benefit, real property titled in that person's name at the time of death will be subject to an estate recovery lien. Advance planning for people who may need the long-term care benefit to cover skilled nursing home care is essential to arrange assets legally and in a way that will not create ineligibility.
Take Legal Steps Now to Avoid Contested Will Litigation and Probate Disputes
Depending upon your circumstances, there may be other ways to avoid probate or other court administration after the death of a loved one. The Mullin Law Firm in Concord, California, offers experienced legal counsel and representation for families, estate administrators, executors and trustees looking for strategies to avoid probate court following the death of an estate holder. Our attorneys assist families in all aspects of probate and estate administration. Sadly, these matters can become contested following the death of a family member. The Mullin Law Firm is also here for you during these difficult times, as we have significant litigation experience.
Experienced Concord, California, Estate Planning and Administration Lawyer
From offices in Concord, our lawyers represent clients in communities throughout Contra Costa County, Alameda County and Solano County, California. Call us toll free at 866-477-0304 or contact us by e-mail to arrange a free consultation with one of our experienced Concord estate planning attorneys today.