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Avoid Probate Administration Issues with Estate Planning Advice & Legal Options

Sep 4, 2018 | Estate Planning

Avoiding probate administration saves your loved ones time and unnecessary legal fees.

There are many benefits to proactive Estate Planning activities in efforts for avoiding Probate Administration Legal issues and ensuring your loved ones can carry out your wishes. No one wants to be caught up in a sizable number of unplanned legal intensive issues dealing with the administrative requirements of Asset Distribution, Probate Taxes or the accumulation of avoidable legal expenses.

The most effective way to avoid probate legalities is to establish an Estate Plan before it is needed.  Continue to read below to see the protection and control you can have, to carry out your wishes, through the many Estate Planning Legal Options available in California.

When you are ready, our friendly and experienced Estate Planning Attorneys will be there to guide you through all the Estate Planning Process and Legal Options. There’s no better time to get started, than today.

Give us a call today and take advantage of a Free Estate Planning Consultation knowing someday, everyone involved will be very glad you did.

What is Probate?

Probate is the legal process in California which allows a county court to determine that a person’s assets are distributed according to their wishes detailed in a will upon the person’s death. In situations where a will does not exist, assets are distributed according to state law.

The probate process will seek to determine the wishes of the deceased, what debts (if any) are to be paid, and then orders the distribution of the probate estate assets in accordance to the wishes of the deceased or applicable laws.

What Are the Benefits of Avoiding Probate?

There are many benefits to minimizing or avoiding the probate process for you and your loved ones. Here are four of the largest benefits:

  1. Unnecessary Costs: Probate is a legal process that is administrated by the court system. In most cases, this means that an attorney will need to be involved in the process. The process will also require the appointment of an executor to direct the procedure on behalf of your heirs. The attorney and executor are entitled to receive fees payable from your assets. The state of California set the fee rates, which vary depending on the value of the estate. The associated fees for the attorney and executor are:
    1. 4% of the first $100,000 in assets
    2. 3% of the next $100,000 in assets
    3. 2% of the next $800,000 in assets
    4. 1% of the next $15,000,000 in assets

    If one or more of the heirs are serving the role of executor, they can agree to wave the fees for their service. However, the attorney’s fees are generally unavoidable. In addition to these fees, there are court fees and expenses that can add significant costs. If the court requires an appraisal of the estate, there can be an additional fee equal to as much as .1% of the property value.

  2. Time Requirements and Disbursement Delays: As with many legal processes, there are many documents and forms that will need to be filed with the court, with many actions requiring the court’s supervision. Depending on the complexity of the estate, the process of transferring property to your intended heirs can last between 6 months to 2 years. During this process, there may be restrictions on selling any property or, if the property is sold, your heirs may have limited access to the proceeds from the sale.
  3. Public Record: As with most court-related proceedings, probate is subject to public record. This means all documents relating to the probate, including ones relating to the transfer of property are filed with the court and is available for public review. In most instances, this means not only will the value of your assets be subject to public disclosure, but also your beneficiaries and any conditions related to their receipt of the assets.
  4. Unintended Distributions: Especially in situations where a will is not present, the distributions of your assets will be decided by the probate courts. A judge, who you likely have never met and knows nothing about your desires, will make the decision how and who your estate is divided and distributed. This means someone who is a direct heir could be eligible by law receive part of your estate, even if it was not your intention.


“I thought that I had taken care of my family with a will and life insurance. After a friend went through a lengthy probate process, I contacted Abrate & Olsen Law Firm for legal advice for probate avoidance. They were able to help me establish an estate plan that included revocable living trusts to help my family avoid the probate courts and minimize the estate tax. This law firm not only saved my family money, but more importantly time and stress.”
– Brian B. Sacramento, CA

Avoiding Probate with an Estate Plan

Now that you know why you may want to help your loved ones avoid the probate process as much possible, you need to understand what options are available to you. Our expert estate planning attorneys have helped clients just like you avoid or minimize the need for probate courts with the use of legal options as part of a detailed estate plan. You can rest assured we will listen to your wishes and eliminate any concerns you may have. We guide you through the many legal options available to ensure that your assets will be distributed as you desire with the least amount of interference from the probate courts.

An estate plan helps ensure your legacy and assets are handled as you envision.

There are many legal options available in the state of California that allow you to transfer ownership of your assets outside of probate. Here are some of the most common ways we have recommended to clients to help avoid probate:

Trusts

Trusts are legal documents used as powerful tools in an estate plan. Assets that are held in a trust can avoid probate by transferring ownership to a trustee who cares for the asset until ultimately transferring them to your intended beneficiary. An excellent feature of many trusts is the ability to name yourself as the trustee for the assets. This means that you can remain in physical control of the asset as detailed in the trust. In the trust, you name a successor trustee who is responsible to finalize the transfer of the assets to your beneficiaries after your death.

You can put virtually any asset you own into a trust (real estate, vehicles, bank accounts, etc.). There are several types of trusts that can be used to help you achieve specific goals. They are categorized as living, testamentary, revocable and irrevocable trusts. Our estate planning attorneys can guide you through selecting the best type of trust for your unique situation.

Gifting
You can transfer assets to your intended beneficiary before your death. This process is known as a lifetime gift or an inter vivos gift. It allows you to transfer ownership of your assets prior to your passing and thereby avoiding probate. It is important to take into consideration any income tax or gift tax effects that can be associated with a significant gift.
Real Property by Right of Survivorship
Pursuant to California Civil Code §683, allows owners of real property to designate who will succeed to their property upon death. This is done through the manner in which the title to the asset is taken. Individuals can hold title to an asset in joint tenancy, which includes the term right of survivorship by definition.

Upon the death of one of the joint tenants, the asset is then owned in entirety by the surviving joint tenant. The process of transferring the title is generally accomplished through recording of a death certificate and affidavit regarding the death with the county recorder’s office where the property is located. The California Civil Code applies to both real and personal property but does not include bank accounts. By utilizing right of survivorship, a will does not control the distribution of the asset and thereby avoids probate.

Real Property Revocable Transfer on Death Deed
A new option available in California, that became effective January 1, 2016, allows real property to be transferred through a revocable transfer on death deed upon death. Also referred to as a TOD deed or beneficiary deed, this deed allows the property to avoid probate. The new law will expire on January 1, 2021 to allow time to study the effects. Deeds that are executed before the law expires will remain in effect and could be revoked at any time. Unless the law is extended, no new deeds can be executed after the expiration date.

Transfer on death deeds are directly comparable to pay on death or transfer on death accounts with banks or brokerages. They are subject to statutory rules and requirements to ensure validity and operation. These rules and requirements can be complex and you should always speak with an attorney with experience in this area.

Payable on Death Accounts (POD)
A very easy and cost-effective way to transfer cash assets to a named beneficiary and avoid probate can be done by adding a payable on death designation to your bank accounts. In California, designating a POD beneficiary for your savings accounts, checking accounts, and any certificates of deposits, allows them to take control of any funds that remain in the account. You retain full control of the money and the beneficiary has no guarantee the accounts will have any value. The transfer is completed by the beneficiary providing proof of your death to the bank.
Transfer on Death (TOD) Securities Registration
Most states, including California, have adopted a law that allows you to designate someone to inherit your stocks, bonds, or brokerage accounts without requiring probate. A TOD works very similar to a POD designation. When you register your ownership, you request to take ownership in beneficiary form. The resulting ownership papers will then include both you and your beneficiary’s names. Like with POD accounts, the named beneficiary only gains rights to the assets after your passing. The transfer is completed by the beneficiary providing proof of your death to the broker or transfer agent.

Additionally, the process may be followed to establish a Transfer on Death Registration for Vehicles with the Department of Motor Vehicles.

Multi-Party Account (Joint Accounts)
  • Multi-party or joint accounts differ from a POD account in that both every person on the account has access to, and control of the funds at any time. Upon your passing, your share of the funds are owned by the surviving account holder(s). The transfer of the funds is completed be the terms of the contract or, if not specified in the contract, by operation of law to the surviving individual(s). Therefore, the distribution of funds avoids probate.While a multi-party account is convenient and easy way to avoid probate, there are risks associated with this option, including:
    1. The account is vulnerable to the creditors of all owners of the account. Should one owner be found in default for a debt, the account could be used for repayment.
    2. If one of the is married and then gets divorced, the full assets could be considered part of their property and be divided in the divorce.
    3. Funds in joint accounts can also be considered when determining eligibility for government benefits such as Medicaid. Transferring funds from the account or removing a person from the account can be considered an “improper transfer of funds” and make any party ineligible for benefits for a period of time.
Transfer of Real Property with Retained Life Estates
You can use a transfer of real property with the retained life estate to avoid the property passing through probate. In this situation, you would transfer ownership of real property, for example a house, to a designated beneficiary while retaining the right to posses the house until your death. The beneficiary’s interest in the house is considered the remainder of the asset and becomes the owner upon your passing.

A point to consider prior to using a transfer of real property with retained life estate are potential tax effects. By transferring the property, you may lose any tax benefit the property provides. Our estate planning lawyers can provide you with the guidance needed to plan for the effects associated with this option of avoiding probate.

Simplified Options for Estates Valued at $150,000 or Less
If the total assets, considered for probate, do not exceed $150,000, you can avoid probate. The total only takes into account assets that are defined as probate assets. Assets like life insurance (not payable to the estate), IRAs, 401ks, assets held by a living trust or joint tenancy assets are not considered.
Personal Property Totaling Less than $150,000 by Affidavit
This option for avoiding probate your beneficiary must present a affidavit to the person or entity that has custody or control of the property, or is acting as the registrar or transfer agent of the property, requesting that it be distributed or transferred to them. The following rules are applied to this procedure:

  1. A minimum of 40 days must have passed since the death.
  2. There have been no completed or are no pending administration proceedings for the estate.
Real Property Valued Less than $50,000 by Affidavit
Filling an affidavit for real property of small value with the Superior Court in the County where the property is located and then recording a certified copy with the county recorder is an option to avoid probate for real property valued less than $50,000. The following rules are applied to this procedure:

  1. Six months must have passed since the death.
  2. There have been no completed or are no pending administration proceedings for the estate.
  3. All funeral, last illness, and/or unsecured debts related to you, must have been paid prior to filing.
Real and Personal Property Totaling Less Than $150,000
Similar to the personal property by affidavit described above, if you owned property in California not exceeding $150,000 in value, your heirs may avoid probate. Your heirs file a simplified procedure with the Superior Court asking for an order to determine their right to take possession of the property without probate administration. The $150,000 value is determined following the same guidelines as the personal property by affidavit process. The following rules are applied to this procedure:

  1. A minimum of 40 days must have passed since the death.
  2. There have been no completed or are no pending administration proceedings for the estate.


“When it come to estate planning lawyers, Mike is the best! He was able to explain how a living trust transfers property from me to my children without subjecting them to the probate process. His legal advice and knowledge for developing a great estate plan are second to none!”
– Stacy H. Roseville, CA

Do you want to protect your family and loved ones from a potentially unnecessary long and costly probate administration process? Schedule a consultation with our expert estate planning attorneys who have helped families just like yours avoid probate.

Contact Us Today!