“Probate” is the legal term explaining how a deceased person’s estate is administered. Some of the processes entailed include – will validation, debt/tax repayment, and asset distribution. Furthermore, some cost implications are traditionally associated with estate administration during probate and some of them include the following:
- Attorney Charges
- Court Filing Charges
- Executor/Administrator Fees
- Appraisal Fees
- Bond Fees
There could even be miscellaneous costs such as the publication of death notices. The point is that the cost implications can be enormous, especially in locations like California, which is known to have one of the highest probate fees. For more information on this, you can see: https://www.ajs.org/.
It is therefore not surprising that the possibility of avoiding probate fees in California is a commonly asked question. For starters, it is good to know that a lot of these fees can be avoided but this calls for timely and proper planning. Read on as this article discusses some strategies for avoiding these fees in California.
Probate Fee Avoidance Strategies in California
Avoiding most of the probate fee charges would do the estate’s net worth a lot of good. This is considering how enormous the charges can be. However, the benefits are not only tied to finances as there are also benefits in terms of timely estate administration and confidentiality. Having made this known, some of the avoidance strategies are as follows:
Living Trust Establishment
This is an arrangement that sees the transfer of assets to another person/people during a person’s lifetime. However, the asset transfer is into a trust, which strongly suggests that some conditions are to be met.
One such could be ineligible for asset acquisition until after your death. Of course, other conditions could be attached.
By the way, some strategies would not work for everyone. However, this is one of the few that would work for everyone, which is one of the benefits. Other benefits in the mix include:
- Immediate Access of Beneficiaries to Assets – This is once eligibility requirements are met
- The Possibility of Modifying Terms by Trustee (While Alive)
- Privacy Protection
- Possible Tax Benefits
However, even this strategy needs to be properly implemented to achieve the right results. For starters, the trust in question needs to be properly funded and the assets properly retitled.
Secondly, it needs to be regularly reviewed and updates executed when the need arises. Thirdly, you may also want to consider having a pour-over will as a backup. Some of the benefits of doing this include:
- Greater Simplification of Estate Management
- Ensures Efficient Asset Transfer – This is even when the asset is not properly placed in trust
- Greater Flexibility
- Ensures Private
- Avoidance of Partial Intestacy
There is also the need to make an informed choice between irrevocable and revocable trusts. You can click here to learn about what both entails.
Joint Ownership
There are two possibilities for those considering this strategy. It is either they opt for the JTWROS or Community Property with Right of Survivorship options. By the way, JTWROS stands for Joint Tenancy with Right of Survivorship.
The JTWROS option is mostly used by married couples as the property is automatically transferred to the surviving spouse if one of them becomes deceased. However, married couples can also choose the Community Property with Right of Survivorship option, especially because of the tax privileges.
Generally, there are benefits regardless of the option chosen. Immediate asset transfer to the surviving spouse after the demise of one of the partners is one such. Overall, estate administration is very simplified and does not even require court involvement.
However, the decision for eligible persons to consider any of the joint ownership strategies should be well-informed. This is because of the possibilities of certain adverse situations, including:
- Exposure to Co-Owners Debts – Which can adversely impact your estate’s net worth
- Unsuitability for Non-Spousal Situations
- The Possibility of Gift Tax Implications
- Asset Loss Due to Control Issues
Overall, the most important thing for those considering any of these joint ownership options is being in the right partnership. What is meant to be an advantage can become a nightmare when one is partnered with the wrong person.
Small Estate Affidavit
Section 13100 of the California Probate Code validates what is known as the Small Estate Affidavit. It is a part of the said code allowing heirs to secure the assets they are beneficiaries of without undergoing the cost, time, and procedural demands of traditional probate processes.
However, the major condition is that the value of the estate does not exceed a certain threshold. The threshold as of the time of writing this article (in 2024) is 166,250 dollars. However, there are other eligibility criteria and they include:
- Deceased being California Resident as of Time of Passing – This is expected considering that it is a California code, rather than a federal/national one
- A waiting Period of 40 Days before the filing – The count starts after the death of the person
- Probate Proceedings Should not be Currently Open or Pending Initiation
- Furthermore, not all assets are transferable with this option. This is even if the financial threshold is not exceeded. Some assets that fall under this category include:
- Mobile Homes
- POD (Pay-on-Death) Accounts
- Retirement Accounts with Designated Benefits – Such as 401ks and IRAs
- Joint Tenancy Held Assets
- Death Benefits or Life Insurance Benefits that Are Payable to Beneficiaries who Are Named
- Properties Passed on Directly to the Living Spouse
- TOD (Transfer-on-Death) Securities
- Registered Vehicles & Vessels
Furthermore, certain documentation is required for getting probate charge-free benefits using this strategy. Some of the said documents include:
- Death Certificate
- Inventory & Appraisal
- Proof that the Asset is Indeed Owned – Such as bank statements, property deeds, vehicle titles, and stock certificates
Proper filing is also important, which is why local and expert guidance is seriously recommended. For example, the services of a highly rated probate attorney in Orange County, CA should be sought if you are situated in this part of the state. Opting for one with local experience also ensures local expertise is not lacking.
Conclusion
Three (3) Strategies for avoiding probate fees in California have been discussed in this article. While these strategies are some of the very notable options, the list is not exhaustive, which is why the advisory services of a qualified probate attorney are strongly recommended.
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14751 Plaza Dr STE G, Tustin, CA 92780
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1101 California Ave #100, Corona, CA 92881
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