For many families, probate is not ideal. It’s hard enough dealing with a loved one’s loss, but to then be inundated with a long and arduous legal process to eventually see their property be rightfully distributed can be frustrating, difficult, and expensive. While the California probate process isn’t as bad as it may be in some other states, it’s still something you may want to avoid.
This is especially true if you want to spare your family the added stress of dealing with attorney fees and significant amounts of paper work in the immediate wake of your passing. With a little preparation and the help of an estate planning professional, you can ensure that your family is spared the unnecessary strain of dealing with California’s probate courts in order to see your legacy be properly distributed.
Depending on the size and complexity of your estate, and a variety of other factors, there are a number of different ways to go about avoiding the probate process.
Understanding the Probate Process
The probate process is the method by which the State of California ensures that property left behind by people who have died is distributed properly. Probate is also enforced as a means to ensure that creditors get a chance to file a claim to collect their dues from the decedent’s estate.
When a person dies, the probate process is kick-started by a petition made to the court, with the decedent’s death certificate. The courts pick an administrator or executor, typically someone from the family, and the process begins.
First things first, the administrator is tasked with sending out a formal notification of the decedent’s passing to all known creditors. Before this, they petition for probate through a Letters Testamentary. If no representative/administrator is chosen, and no will exists, the courts grant a Letters of Administration to a chosen administrator.
Once the probate process begins (as per a Letters), and/or once specific notifications are sent to all discovered creditors, a time limit kicks in. Every case of probate has a minimum time window that must elapse before the estate can be distributed in its entirety.
In the State of California, this time window for creditor claims is 120 days from the filing of a Letters of Testamentary, or 60 days after individual notifications (Notice of Administration) have been issued. Creditor claims sent in within this period are reviewed and accepted/rejected. All claims sent in after either time period has elapsed can be rejected.
Beyond that, however, the probate process also oversees the declaration of the decedent’s estate, its full valuation, and its proper distribution to all rightful heirs. As such, the probate process can vary in length. Most shorter probate processes can still take half a year, and the average probate process can take well over one year.
The main reason for wanting to avoid the probate process is that it can cost a significant amount of time and money. The larger and more complex an estate, the more time it takes to pass through probate and be properly distributed. Your family will seek legal representation to help them throughout the process, which is an additional cost.
The smaller the estate, the faster the probate process. One reason to consider alternatives to probate is to lean out your estate and ensure that the final total value of your estate lies below $150,000, at which point an estate need not be probated.
While probate is not always a huge time and money sink, there may be more efficient ways of ensuring your property is distributed as you see fit. With or without probate, however, it’s critical to avoid having no estate plan at all and dying intestate.
When a person dies without a will or any other form of estate planning, they die intestate. This means that the state’s laws determine who gets what. The probate process is then critical in determining the full extent of the decedent’s estate, and how much of it gets distributed to whom.
Intestate laws determine the priority of each surviving kin. It gets complicated very quickly, depending on who survives, on what side of the family, and what relation they have to the decedent.
Intestate laws are typically similar from state to state, in that the surviving spouse receives most of the estate, while the children get the rest – and so on. The Table of Consanguinity usually dictates in what order kin are considered for inheritance.
If no surviving kin exist whatsoever, which is a very rare case, and no will/estate plan can be identified or found, then the property may be escheated to the state. The obvious argument against dying intestate is that you relinquish all control to the state.
Your family has no control over who gets how much, and your wishes – as they are legally unknown – play no role. A simple estate plan can ensure that you control who gets what, and even when.
Probate and Trusts
A last will and testament does not bypass probate, although it does give the courts and the administrator a guide as to how your estate should be dissolved and distributed. The probate process can only be avoided by finding other ways to pass property on after you die.
While a will represents your wishes regarding property should you pass away, there are more complicated estate planning tools that don’t only convey your intent, but act as legitimate vehicles for your assets and properties.
A living trust, for example, is an agreement forged between you, a successor trustee, and a series of chosen beneficiaries. Living trusts are named such because they go into effect while you are alive (as opposed to testamentary trusts, which are only technically valid once you die), and they create a legal entity that holds your property “in trust” for your beneficiaries.
Only property detailed within the trust document is funded into a trust, and such property must be retitled appropriately to reflect this change. In effect, property within a trust is not technically yours – it is owned by the trust, and as such, not a part of any probate process.
There are many kinds of trusts, with a large variety of options for customization. Some trusts are designed to support people for decades to come.
Some trusts are designed only to distribute once the beneficiaries have met a specific condition, like starting their first business or becoming 30. While trusts lack some of the abilities found in wills, specifically the ability to name a guardian for your child, they completely bypass the probate process.
Beyond a Living Trust
There are types of property and certain assets and accounts that cannot be funded into a trust, and that need not be addressed in a will. These include retirement accounts, transfer-after-death real estate, and life insurance policies.
This is because these accounts, assets, and properties come with the ability to directly name a beneficiary, thus bypassing probate, and automatically becoming the beneficiary’s property after your passing. As such, they cannot be funded into a trust.
Not all property that can be directly bequeathed onto a beneficiary is automatically bequeathed. You should consult a legal professional and review your accounts and properties to determine which you can transfer directly upon death.
This might not always be within your best interest – a trust gives you more control over when and how certain accounts or assets are transferred – but for life insurance policies and retirement accounts, these are the only ways to ensure any remaining funds are transferred to your loved ones after death.
If you play your cards right, then you can ensure that your family avoids the probate process. However, it’s important to seek professional legal help.
DIY documents for estate plans exist all over the Internet, but these are too general, and can lead to clerical errors that may cost a small fortune to rectify. Doing it right the first time will save you from unnecessary costs.