How to Avoid Probate in California
Probate is time-consuming, it can be expensive, and it entails significant delays before beneficiaries can receive their inheritances. It is also completely unnecessary under most circumstances. With appropriate estate planning, you might be able to avoid the complications of probate. Following are some of your options:
Gift Your Assets Before You Die
Your probate estate cannot consist of anything more than the probate assets you own at the time you die. To avoid owning probate assets when you die, or to at least reduce the value of your probate estate, simply give away your property to your beneficiaries before you die. Do keep in mind, however, the gift taxes apply under certain circumstances.
Set Up a Living Trust
To set up a living trust, draft a trust document containing a list of trust assets, names of trustee(s) and beneficiaries, and instructions on how to manage trust assets. You can serve as your own trustee, as long as you name a replacement trustee to take over after you die. You can deposit almost any asset into a California living trust--real estate, bank accounts, and vehicles, for example.
Trust assets pass to your beneficiaries upon your death with no delays, except that you can choose to distribute your assets to your beneficiaries on a periodic basis. You might, for example, establish a trust that provides a monthly stipend to a spendthrift relative instead of a lump sum gift.
Joint Ownership With the Right of Survivorship
Property subject to joint ownership with the right of survivorship passes to the other joint owner(s) as soon as you die. This arrangement might include, for example, two people who jointly own a certain parcel of real estate, or a married couple or domestic partners who own community property in common.
Revocable Transfer on Death Deed
A revocable transfer on death deed, a California innovation, allows the owner of real property to deed property to one or more beneficiaries and thereby exempt that property from probate after the owner dies. If the owner deeds the property to more than one beneficiary, each beneficiary must own equal shares. The California legislature is in the process of modifying the law on transfer on death deeds.
Payable-on-Death Designations
You can add a “payable-on-death” (POD) designation to your bank accounts. Once you die, your beneficiary can claim the money in the account directly from the bank, with no need for probate.
Vehicles With Transfer-on-Death Registration
You can also designate a transfer-on-death beneficiary for your vehicle, as long as it is registered in California. Just as with payable-on-death bank accounts, the property will pass directly to your beneficiary when you die, with no need for probate.
Be Careful!
The foregoing list of legal vehicles for avoiding probate is not exhaustive. Setting it all up can subject you to many potential pitfalls. If you try to transfer real property under a revocable transfer on death deed, for example, and you purport to grant it to two or more beneficiaries in unequal shares, its probate exemption might become invalid. Talk to your lawyer about dotting your i’s and crossing your t’s before you finalize any plan to avoid probate.
Contact Masumi Patel Today
Masumi Patel enjoys the benefit of over 15 years of experience in estate planning. She will help you create an individualized estate plan that is tailor-made to suit your particular needs and priorities. Contact the Law Office of Masumi Patel by calling (310) 316-4533 or by filling out our online contact form.