Where do your possessions go when you die? It’s a thought-provoking question that forces us to confront the inevitable reality of our mortality. As estate planning attorneys at Hermance Law, we understand the importance of ensuring that your hard-earned assets are protected and distributed according to your wishes. One term that often comes up in these discussions is “probate”. Probate is often viewed with a negative connotation. In this article we will shed a light on what probate is, what’s “wrong” with probate in California, when it is required, and most importantly, provide you with strategies to avoid probate costs and secure your family’s financial future.

What is Probate?

Probate is a legal process that takes place after someone passes away. It involves proving the validity of their will (if they have one), identifying and inventorying their assets, paying off debts and taxes, and distributing the remaining assets to the designated beneficiaries. The court oversees this process to ensure that it is carried out correctly and in accordance with the law.

What’s “Wrong” with Probate in California?

Probate in California has earned a reputation for being time-consuming, expensive, and public. Let’s face it: no one wants their loved ones to endure unnecessary hardships during an already challenging time. 

One major concern with probate is the cost. In California, probate fees can be substantial, as they are calculated based on the gross value of the probate assets. These fees can easily add up to thousands or even tens of thousands of dollars, reducing the estate’s value and diminishing the inheritance intended for your loved ones.

Probate costs can also vary depending on whether professional services, like hiring an attorney or accountant, are utilized.

When it comes to attorney fees, they are typically determined as a flat fee based on the overall value of the estate. Aside from attorney fees, there are other potential probate costs to consider. These may include court costs, such as filing fees or notification fees, as well as accounting services, probate bond fees, and estate taxes. It is important to note that estate taxes are applicable only to estates valued over the federal estate tax exemption of $12.92 million, as California does not have its own state-specific estate or inheritance tax. Additionally, miscellaneous expenses like notary fees or postage costs may also be incurred.

Another common probate cost is compensation for the executor or personal representative. Similar to attorney fees, the compensation for a personal representative is outlined in the California Probate Code and is based on the total value of the estate being managed.

When is Probate Required in California?

Not all assets go through probate. In California, certain assets are exempt and can be transferred outside of the probate process. Here’s a list of common assets that may be subject to probate:

  • Solely owned property: Real estate, bank accounts, investment accounts, vehicles, and personal belongings that are solely owned without any designated beneficiaries or joint ownership.
  • Assets without a designated beneficiary: Retirement accounts, life insurance policies, and certain financial accounts that don’t have designated beneficiaries or transfer-on-death instructions.
  • Assets owned in the deceased person’s name: Business interests, intellectual property, and other valuable assets that are solely owned by the deceased.

Ways to Avoid Probate in California

Fortunately, there are several strategies you can employ to avoid probate and the associated costs and delays. Here are a few effective methods:

  • Establish a Living Trust: A living trust allows you to transfer ownership of your assets to a trust, managed by a trustee of your choosing. Since the assets are owned by the trust, they are not subject to probate. With a properly executed living trust, your assets can be distributed to your beneficiaries quickly and privately.
  • Utilize Joint Ownership: Joint ownership with rights of survivorship is a way to avoid probate for certain assets. When one owner passes away, the surviving owner automatically becomes the sole owner of the asset without the need for probate. However, this approach should be considered carefully and in consultation with an estate planning attorney to ensure it aligns with your goals and circumstances.
  • Designate Beneficiaries: For assets such as retirement accounts, life insurance policies, and financial accounts, you can designate beneficiaries directly. By doing so, these assets can be transferred to the designated beneficiaries outside of the probate process.
  • Gift Assets During Your Lifetime: Transferring assets to your loved ones during your lifetime can be an effective way to avoid probate. However, this strategy should be approached with caution, as there may be tax implications and considerations for Medicaid eligibility.

Take Control of Your Estate with Hermance Law!

At Hermance Law, we understand the unique challenges and concerns surrounding probate in California. Our experienced team of estate planning and probate attorneys is here to help you navigate the complexities of the legal system and provide you with effective strategies to avoid probate. We take pride in offering comprehensive estate planning solutions tailored to your specific needs and goals.

Don’t let the burdensome probate process diminish the value of your estate and burden your loved ones. Take control of your assets and secure your family’s financial future. Contact us today to schedule a FREE, friendly, and professional consultation. Our dedicated team at Hermance Law is ready to guide you through the estate planning process, answer your questions, and ensure that your wishes are followed. Don’t wait until it’s too late – let us help you avoid probate costs and provide peace of mind for you and your loved ones.

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