Probate is basically a lawsuit filed against you for the benefit of your creditors. It is a fully public court proceeding that takes, in California, about 12 to 18 months to get through. There is an open record for everyone to see an accounting of your assets and your debts. Your creditors come in and claim your estate to get paid. Whatever is leftover gets dispersed to your beneficiaries and your heirs. There are a lot of things that are troublesome or difficult with probate. It takes a long time and it is expensive, between the court fees, attorney's fees, assessment fees, and bonds that might have to be posted.
The costs are estimated to be about roughly five percent of the gross value of your estate. It is very easy, in California, to have a million-dollar estate, between the value of a house (not the equity, but the fair market value), bank accounts, and investments, which would cost your family roughly $50,000 to go through the probate process. Another downside of probate is that it is fully public. People scour these probate records and will see that a young person is coming into a large amount of money. They will then prey on them through scams. Even though estate planning may cost you some upfront, the amount that you are saving for your family by avoiding probate is huge.
Assets Subject To Probate
Anyone in California who has assets titled in their name totaling above $184,500 (as of 2023, but tied to inflation) is subject to probate, if they haven't done further planning. Again, this is the fair market value of the assets, what they would be sold for, not necessarily the equity you may or may not have in them. Certain assets don't count towards your probate estate. If you have life insurance policies and you're designating beneficiaries, those pass outside of probate. Retirement accounts, 401ks, and IRAs, where you've named beneficiaries, are not subject to probate either. While life insurance and retirement accounts are not normally subject to probate, many people name their minor children as contingent beneficiaries, which results in these assets now having to go through the probate process!
Matters Of Concern Vis-à-vis Probate And How To Avoid Them
The biggest matters of concern regarding probate are that it is time-consuming, expensive, completely public, and it is for the benefit of your creditors, not for the benefit of you or your family. The best way to avoid probate is to create a fully funded revocable living trust. By fully funded, I mean you have the trust in place and you retitle your assets into the name of the trust. There is no point in creating a trust if you're not going to fund the trust. Another important thing is proper beneficiary designations which will help you avoid probate, such as not naming minor children on life insurance policies and retirement accounts. Owning your home as a joint tenancy with an adult child can also help keep you out of probate but can raise all kinds of other issues that would probably be better served by putting it into a trust instead.
For more information onMisconceptions About Probate In California,an initial consultation is your next best step. Get the information and legal answers you are seeking by calling(951) 332-7079today.