There is a legal process called probate that can come into play when you pass away while you are in direct personal possession of property. The property would become probate property immediately after your passing, and it could not be distributed to the heirs until the estate was probated and closed by the court.
This is true if you had no estate planning documents at all, and even if you have a last will, the will would be admitted to probate, and the estate administration would be supervised by the probate court.
However, there are some exceptions to this rule in California. If assets are being transferred to a surviving spouse or registered domestic partner, a Spousal Property Petition can be utilized. The probate court would be in the loop to approve or deny the request, but if it is approved, the spousal transfers would not be subject to the full blown probate process.
There is also a simplified probate procedure that could be used for estates that are valued at less than $150,000.
A Probate Overview
When you draw up a last will, you nominate an executor. This is the person who will handle the estate administration tasks after you die.
If you did not nominate an executor in your will, or if you died without a will, the court would be forced to appoint a personal representative to administer your estate.
The executor is required to inform creditors about the passing of the decedent during probate. If and when they come forward, all valid final debts must be paid. This would include final taxes.
Property that was held by the decedent must be identified, and everything must be inventoried by the executor. In some cases, property liquidation will be necessary so that the value of the property can be spread among multiple heirs. The executor would be charged with the property liquidation tasks.
Ultimately, the assets that comprise the estate would be transferred to the heirs after all of the requirements were met and the estate was closed by the court.
Things to Know
There are some things that you should know about the probate process. It is not negative by its very nature, but it does not always make things easy on the heirs to the estate.
The probate process can get lengthy, and inheritances are not distributed to inheritors until the process has run its course. If everything goes smoothly and the situation is relatively simple and straightforward, an estate may pass through probate in around a year.
This can be a rather long period of time to wait for an inheritance. For some, it would be a mere inconvenience, but for others, it could be a real problem.
There are also a number of different expenses that will accumulate during the probate process in most cases, and they can be relatively significant. This is another drawback, because probate expenses reduce the inheritances that the heirs will be receiving.
A third drawback is the loss of privacy. You probably conduct your financial affairs confidentially for a number of different reasons. When it comes to estate planning, there are feelings involved, and people close to you could feel slighted if they knew all the details.
This can sometimes result in hard feelings, and in extreme cases, estate challenges can be issued.
Probate is a public proceeding, so anyone who is interested could access probate records to find out how you decided to distribute your resources.
These pitfalls may be disconcerting to you. If you feel this way, it is possible to be proactive about the implementation of probate avoidance strategies when you are planning your estate.
A Widely Embraced Solution
A legal device called a revocable living trust is a widely embraced solution for people who want to make sure that their loved ones receive their inheritances without having to jump through the hoops of probate.
If you create this type of trust, you can act as the trustee while you are living, so you do not lose control of the resources. After you are gone, the successor trustee that you name in the trust agreement would be able to follow your instructions and distribute assets among the beneficiaries outside of probate.
For more information, please join us for one of our upcoming free seminars. If you have additional questions or concerns about conservatorship in the State of California, contact the Collins Law Firm by calling (310) 677-9787 0r Click Here reserve for a Free Estate Planning Workshop.