28th Apr 2013
Under California law, the value of an estate will be a factor whether the estate undergoes probate or not. Under a new California statute, estates with a value lower than $150,000 need not be probated. Thus, for many Californians, the difference between having to go through a probate process or a more discreet transfer of assets may rest on how the decedent’s assets are declared. Beneficiaries and trustees of the decedent should seek the help of an experienced estate planning attorney in California to see if they can qualify for the Small Estate Law.
The small Estates Law provides that decedents with estate with value less than $150,000 need not undergo probate. The truth is an estate can actually have a value higher than $150,000 and yet qualify for the Small Estates Law. This is simply because many assets are not classified as probate assets. Such assets include: joint tenancy property, life insurance, IRAs, 401Ks, assets which have been included in a living trust, death benefits, registered vehicles, pay from services with the armed forces, pay on death (POD ) account, account with a named beneficiary and unpaid salaries before date of death not over $15,000. Such assets which may be considerable will not be declared as probate assets.
Moreover, the valuation of assets is determined at the date of the decedent’s death – and not on the day the petitioner signed his affidavit declaring the value of the estate. If the petitioner signed his affidavit after January 1, 2012, then the estate is covered under the Small Estates Law.
The small estates provision should be beneficial to beneficiaries and heirs of the estate, trustees of the decedent’s trust, and fiduciaries of the estate, among others. All that an interested party has to do is to sign an affidavit at least 40 days after the death of the decedent and giving pertinent information as required by Section 13101 of the California Probate Code. The court then forwards the affidavit to the institution administering the decedent’s assets. The assets are then transferred toothed person who signed the affidavit or declaration. Creditors of the decedent are paid from the assets, and the remaining assets are transferred to the beneficiaries or heirs. All of these procedures happen outside of probate.
The provision on small estates was promulgated with the objective that creditors still get paid. Thus, an estate with substantial debt or one which is insolvent or close to it cannot qualify for the small estates law. In cases where even the beneficiaries disagree as to how the estate should be transferred, then probate should be used.
This is where the experience and mastery of an estate planning attorney in California comes into play. The lawyer can help identify which items are probate assets and thus keep the total value of the assets at less than $150,000. More importantly, he can advise the heirs, beneficiaries, trustees and fiduciaries of the status of the estate – and may even recommend that probate is best for all concerned.