If you recently lost a family member or a close loved one, you are undoubtedly still going through the grieving process. At some point, however, the legal ramifications of the decedent’s death will need to be addressed by someone. If that “someone” turns out to be you, and you have never before handled the practical aspects of a loved one’s death, you may have a number of questions. One of the first questions people have after losing a loved one that left behind a relatively modest estate is whether all estates need to be probated.
What Is Probate?
When someone dies, they leave behind assets owned by them at the time of their death. Eventually, those assets need to be legally transferred to the new owners. Probate is the name given to the legal process that facilitates those transfers as well as values the estate assets, notifies creditors so they can file claims, and ensures that any tax obligation due from the estate is paid. Any challenges to the decedent’s Last Will and Testament are also litigated during the probate process.
Why Do I Want to Avoid Probate?
If you are handling the administration of a decedent’s estate for the first time, you may not have the experience to understand why avoiding probate is so desirable. The two primary reasons for avoiding probate are the cost and the time spent on the probate process. Formal probate can be a very lengthy process, in part because you cannot conclude the probate of an estate until creditors have been given an opportunity to file their claims. In California, creditors potentially have up to four months to file a claim which then must be reviewed and approved or denied. Consequently, probating even a fairly simple estate will take a minimum of about six months in California. Complex assets and/or litigation could easily cause the time it takes to get through probate to exceed a year. In addition, probate can be expensive because everyone involved in the process is entitled to a fee for their service, including the Executor, accountants, and attorneys. Because costs associated with probating the estate are paid by the estate, formal probate can significantly diminish the overall value of the estate that is passed down to beneficiaries.
Do All Estates Need to Be Probated?
Although some type of probate will likely be required following a decedent’s death, it may be possible to avoid the time and expense of formal probate. Most states, including California, offer an alternative to formal probate for small estates that meet the criteria. In California, there is a simplified affidavit process that can be used to transfer personal property if:
- You have the legal right to inherit the property AND
- The probate estate value does not exceed $150,000
Note, however, that the simplified affidavit process is not available if you wish to transfer title to real property, such as a home.
Before you evaluate the estate for the simplified affidavit process though, you will want to consider the type of assets included in the decedent’s estate because not all assets are required to go through probate. Non-probate assets not only bypass the probate process, but they are also excluded when determining the value of the estate for purposes of determining if the estate qualifies for the simplified affidavit process. It is imperative, therefore, to categorize all estate assets as soon as possible. Common examples of non-probate assets include assets held by a trust, certain types of jointly held property, financial accounts designated as POD or TOD, and proceeds of a life insurance policy. These non-probate assets can be distributed to the beneficiaries right away which can be extremely beneficial if loved ones need the assets to help cover final expenses for the decedent or living expenses for survivors.
Contact Los Angeles Estate Planning Attorneys
For more information, please join us for an upcoming FREE seminar. If you have additional questions about how to prevent ending up in Probate Court, contact an experienced Los Angeles estate planning attorney. Contact the Collins Law Group by calling (310) 677-9787 to register for one of our FREE estate planning workshops.