January 15, 2010

Avoid Probate

Formal probate is essentially the process in which a person's assets are collected, debts paid off and the remaining balance of the decedent's assets are distributed to the decedent's heirs. 

If given the choice, people would rather avoid formal probate. The reason for this is the cost of probate, thousands of dollars typically, and the time it takes to complete probate, 7 months at a minimum. In light of this, a common question in estate planning is "how can I avoid going through probate when my relatives pass away." The good news is that the following situations do not require formal probate:

1. Non-probate transfers

Real and personal property passing outright to a named beneficiary without the need for formal probate administration is explained in detail here.

2. Transfer to surviving spouse or domestic partner

A surviving spouse or domestic partner is entitled to use an expedited probate procedure, a court-submitted petition, to transfer the deceased spouse's property to the survivor. Prob C §§13500-13660. However, spousal probate is purely optional as all or any part of decedent's estate can be transferred via formal probate as well. Prob C §§13502-13503. The form that is filed with the appropriate Superior Court is DE-221.

3. Transfer of Small Estates

There are 3 types of small estate transfers: (1) personal property assets passing under small estate declaration, (2) transfer of real property via a  court order determining succession and (3) transfer of real property via affidavit. Options (2) and (3) are seldom invoked because the limit to transfer real property for those options is very low and the price of California real property is quite high. In the case of option (2), the value of the real property must not be greater than $20,000. In the case of option (3), the gross value of the decedent's real and personal property in California must not exceed $100,000. Hence, option 1 is the most commonly used amongst small estate transfers.