Probate is the process by which property passes to your heirs after your death. It is not always required, however. In fact, it is not difficult to avoid the probate process altogether. There are several estate planning tools that can be used to ensure that your property passes to your heirs without having to go through the probate process. Some common tools used for this purpose include joint ownership of property or assets, revocable living trusts, gifts and pay-on-death accounts. You should always consult with an estate planning attorney in California to determine which of these tools would be suitable for you.
Joint Ownership of Property
Joint ownership is a common way to avoid probate. When one of the joint owners dies, the surviving joint owner retains ownership of the property automatically. So, the transfer of ownership occurs without going through the probate process. There are different types of joint ownership that can be created. Therefore, it is wise to discuss your options with a California estate planning attorney to see what is best to fit your needs.
Revocable Living Trust
A living trust, generally speaking, is very similar to a will. The most significant difference is that the property placed in the trust does not become part of your estate after your death, except for federal estate tax purposes. This is because, at your death, the trustee actually owns the property instead of you. However, you still have the opportunity to determine how the property will be distributed after your death. Your trustee will be able to quickly and simply transfer your trust property to the heirs you intended, without going through the probate process.
Another easy way to avoid probate is to give your property to others as gifts while you are still alive. In essence, if you no longer own the property when you die, the property is not required to go through the probate process. The cost of probate is directly related to the value of your assets at the time of your death. Therefore, if you have to go through probate, the process will also be less expensive for you because your gifts will decrease the value of your estate. Another advantage of giving is that all gifts of $14,000 or less are eligible for the Annual Gift Tax Exclusion.
A very simple way to pass along some of your financial assets is to convert your bank account or retirement account into a payable-on-death account. All that is required is to complete a form that lists a beneficiary or beneficiaries of that particular account. At your death, the money in a payable-on-death account will be transferred automatically to your named beneficiary without the need for probate.
To learn more, please download our free Overview of the California Probate Process report.