The legal process of probate can be a factor when postmortem asset transfers are taking place. In the state of California, if you are transferring more than $150,000 to someone other than your spouse, the estate will most likely have to pass through the probate process.
Property can be claimed with a simple affidavit if the estate is valued at less than $150,000 as long as there is no real estate that is valued in excess of $50,000. It is also possible to transfer assets to your spouse outside of probate using a spousal property petition.
There are certain types of asset transfers that are not subject to the probate process. Life insurance proceeds would be paid to the beneficiaries directly, and the probate court would not be involved. However a probate may be needed if you identified your beneficiary as “my estate”.
You can add a beneficiary when you open a bank account or a brokerage account. These accounts are called transfer on death (TOD) or payable on death (POD) accounts. After the death of the primary account holder, the beneficiary would inherit the assets that remain in the account outside of probate. However, there are a number of problems that using this approach can entail. It is best to speak with an experienced and qualified estate planning attorney before proceeding.
Property that is held in joint tenancy would be transferred outside of probate as well. A joint tenant is a co-owner of property. Like TOD and POD accounts, there are a number of significant potential problems with using joint tenancy, including the exposure to a large amount of avoidable taxation. Do not use this strategy without proper counsel from an estate planning attorney.
If you use a revocable living trust as a vehicle of asset transfer as an alternative to a last will, the trustee that you name in the document would be able to distribute assets to the beneficiaries outside of probate. People often use living trusts to avoid probate, because it can be a time-consuming process.
The heirs to the estate do not receive their inheritances until the estate has been probated and closed by the court, so this time consumption can present difficulties.
The exact duration of the probate process will vary depending on the circumstances. A very simple, straightforward case can pass through probate in perhaps eight or nine months to a year.
There are complicated cases that are stalled in probate for considerably longer. Complications that could draw out the process would include estate challenges and the liquidation of a great deal of valuable property.
In addition to the time consumption, there are some considerable expenses that can accumulate during the probate process, and this is another drawback.
Free Probate Report
You should understand everything that you need to know about probate when you are devising your estate plan. If you would like to learn more, we have a valuable resource that is available to you free of charge at the present time.
Our firm has prepared a series of in-depth special reports, and we have a report that puts the probate process under the microscope. To access your copy of the report, go to the Reports section of our website.
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