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Horizon Elder Law & Estate Planning Blog

Thursday, January 28, 2021

Categorizing Estate Assets in California

Probate in California is extremely expensive. By categorizing estate assets in California carefully, it can be possible to avoid probate or minimize the assets that have to pass through the courts. A California estate planning attorney can show you how to set up your estate plan to decrease much of the cost of administering an estate.

Categories of Estate Assets in California

It can help to think of the different categories of estate assets as baskets. You put assets into baskets to easily distinguish which items have to go through probate and which do not. Here are some examples of “baskets” of estate assets that do not have to go through probate in our state:

  • Assets held by a living trust do not have to go through probate. The person who created the trust must have titled the assets in the name of the trust to keep those things out of probate. Some people make the mistake of forgetting to retitle their assets after making a living trust, and their assets have to go through the probate system.
  • If you own things in joint tenancy with someone else, like a joint bank account or vehicle, the item will automatically belong to the survivor when one of the joint tenants dies. The concept of joint tenant often gets confused with rental property, but in the context of estate assets, a joint tenancy merely means that two people own an asset equally.
  • Items owned by two spouses or registered domestic partners as survivorship community property do not have to go into the decedent’s probate estate. The surviving spouse or registered domestic partner has to file a Spousal Property Petition or Domestic Partner Property Petition with the probate court. This process for formalizing the transfer of property is not complicated and does not take a long time to complete. California does not limit the dollar value of assets that can get transferred through this community property process.
  • Some beneficiaries can get a distribution of assets directly from third parties without having to go through probate. If you designate someone as the beneficiary of your life insurance policy or retirement account, that company will send the proceeds to your beneficiary right away, as long as you completed the proper form on the account.

After your separate all of those assets into their “baskets,” you add up the total remaining probate estate. If the sum is no greater than the cap, which is currently $166,250, the heirs can get their distributions by filing an affidavit and going through a quick, simple process, rather than a formal probate procedure.

Probate rules are strict and complicated. Making a mistake can cost you large sums of money in taxes and administration expenses.

A California estate planning attorney can help you avoid problems and arrange your estate plan to meet your goals and your situation. Evaluating the categories that estate assets fall into can mean that your heirs and beneficiaries get the things you intended for them quicker and easier than they would through formal probate procedures. Contact us today.


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