If you use a last will as your primary vehicle of asset transfer, it would be admitted to probate, and the court would supervise the administration process. The probate court would also be involved if you passed away without any estate planning documents at all.
This being stated, there are certain types of asset transfers that are not subject to the probate process. Plus, here in California, there are some probate shortcuts that can sometimes be utilized, and we will share some of the details in this blog post.
Insurance Policy Proceeds
When you have a life insurance policy, you name a beneficiary (or multiple beneficiaries) that will receive the proceeds after your passing if you die under circumstances that are covered. After the death certificate is presented to the company that issued the insurance, the beneficiary would receive a direct payment, and the probate court would not be involved.
Property Held in Joint Tenancy
You can add someone else to the title or deed of your home as the co-owner. This is the condition of joint tenancy, and it comes with right of survivorship. The surviving joint tenant would inherit the entirety of the property after the passing of one joint tenant, and probate would not be a factor.
This can sound like a great way to transfer ownership of your home if you are okay with one person inheriting it. However, joint tenancy is actually quite risky.
To explain through the utilization of a simple example, let’s say that you want to leave the house to your only son. As soon as you add a co-owner, legal possession of the property is shared between you and your son.
Because of this, if there was a legal judgment against him, or if he was to run into tax troubles, his portion of the house could be attached. Another potential drawback is the fact that you would have to get the cooperation of the joint tenant if you ever want to sell the home.
Payable on Death Accounts
A payable on death or transfer on death account is a bank or brokerage account that has a beneficiary. If you open up one of these accounts, after your passing, the beneficiary would assume ownership of the account in a probate-free manner.
Once again, this sounds like a simple solution, but there are pitfalls and limitations. First, you may be able to add multiple beneficiaries, but institutions typically require equal distributions to any beneficiary that is named. This may not be consistent with your wishes.
Some people go this route and they tell the beneficiary to distribute the assets among multiple different family members. Under these circumstances, the beneficiary would not be legally compelled to follow the verbal instructions.
Assets that have been conveyed into a living trust would be distributed to the beneficiary or beneficiaries outside of probate. There are other types of trusts that would also provide direct distributions. We will not get into any details here, because a more complete explanation will be provided at a later date.
Small Estate Affidavit and Simplified Probate
If the value of an estate is no more than $150,000, it can potentially be transferred through the execution of a small estate affidavit. The same thing is true of an estate that contains real estate that is valued at $50,000 or less. There is also a simplified probate process for small estates.
Attend a Free Seminar
We are holding a number of seminars in the near future, and you can learn a lot if you attend the session that fits into your schedule. There is no admission charge, so you have everything to gain and nothing to lose, but we do ask that you register in advance so that we can reserve your seat.
You can visit our seminar page to obtain further details and registration information.
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We are here to help if you are ready to have a meaningful discussion with a licensed estate planning attorney. You can send us a message to request a consultation appointment, and we can be reached by phone at 562-346-3209 or 310-337-7696.
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