Many people fear court interaction, which is a justified fear in my opinion as a 20 year attorney. To make matters worse, a great number of people have grave misconceptions about how to stay out of probate in the State of California. One of the most common errors people make is thinking a “Last Will and Testament” will avoid a court process at death. It will not. Here are some other common errors that people make that may cause their family to have to probate their assets when they die, which is a court supervised process of distributing assets.
A trust can be invalidated for many reasons, including lack of execution, missing pages or hand-written changes. The court will make all attempts to honor a document, but it is not a guarantee.
Allowing the document to stand even when it does not meet all of the legal requirements of a properly executed trust depends on several factors that the court will weigh before deciding whether to allow the document to be followed. If there are only minor changes or annotations that do not alter the substance of the trust, then it may still be considered valid so long as the court believes that is the intention of the person who executed the trust. However, if you made substantial changes or alterations that cloud the testator’s intention then it may be deemed invalid.
It’s important to note that any changes to a living trust should be made with the guidance of a qualified estate planning attorney to ensure that they are made properly and in compliance with applicable laws. If you have any doubts about the validity of your living trust, you should consult with an attorney who can review the document and advise you on your legal options.
2-MY ASSETS ARE TOO SMALL TO REQUIRE A PROBATE
In the state of California, If the Decedent’s “probate property” has an aggregate fair market value of less than $184,500 (in 2023)you may be able to use a simplified probate process called “small estate administration” instead of a full probate. However, if the value of your assets exceeds this threshold, you may need to go through the full probate process.
It’s important to note that the value of your assets subject to probate includes only those assets that are owned solely in your name, and does not include assets that are held in a living trust, have designated beneficiaries, or are owned jointly with another person.
If you are unsure whether your assets will need to go through probate, you should consult with a qualified estate planning attorney who can review your specific situation and advise you on your legal options.
Please note that this value threshold does not apply to people who own real estate in California.
3-EVERYTHING AUTOMATICALLY GOES TO MY SPOUSE
While that may be true, a probate will still be required generally speaking. But, it is not necessarily true under the California Probate Code.
Ca Probate Code §6401 outlines a different division of assets between spouses and children depending on whether assets are deemed community property or separate property and also whether someone has some, one or more than one child. It is very confusing and difficult for a lay person to determine, which is exactly why it is best not to leave things to chance and outline your desires before you pass away.
Preferably a trust should be drawn up but at a minimum a Will can outline how you want to leave your assets behind.
BEST PRACTICES TO AVOID A PROBATE
There are several ways to avoid probate, including:
1.Create a living trust: A living trust is a legal document that allows you to transfer ownership of your assets to a trustee during your lifetime. When you pass away, your assets can be distributed to your beneficiaries without going through probate.
2.Joint ownership: If you own assets jointly with another person, such as a spouse or child, the assets will pass directly to the joint owner when you pass away. (this tool should only be used after seeking advice from a professional as there are also negative consequences of holding assets in joint tenancy and those negatives may outweigh avoiding drafting an estate plan)
3.Designate beneficiaries: You can also designate beneficiaries for certain assets, such as life insurance policies, retirement accounts, and bank accounts. When you pass away, these assets will be distributed directly to the designated beneficiaries without going through probate.
4.Gifts: You can gift assets to your loved ones during your lifetime, which can help reduce the value of your estate and avoid probate.
HOW ARE MY ASSETS VALUED IN A PROBATE?
In a probate, your assets are typically valued as of the date of your death. The value of each asset is determined by its fair market value, which is the price that the asset would likely sell for in an arm’s-length transaction between a willing buyer and a willing seller.
The fair market value of different types of assets may be determined in different ways. For example:
1.Real estate: The fair market value of real estate is typically determined by an appraisal or by comparing the sales prices of similar properties in the same area.
2.Bank accounts and investment accounts: The fair market value of these types of accounts is typically their balance on the date of death.
3.Personal property: The fair market value of personal property, such as jewelry, furniture, and artwork, is typically determined by an appraisal or by comparing the sales prices of similar items.
In California, the valuation of assets in probate is generally done in the same manner as in other states. The fair market value of each asset is typically determined as of the date of the decedent’s death.
For real estate, an appraisal may be necessary to determine the fair market value. For bank accounts and investment accounts, the fair market value is typically the balance on the date of death. For personal property, an appraisal or comparable sales analysis may be necessary to determine fair market value.
It’s important to note that the probate process in California can be complex and may require the assistance of a qualified attorney. If you are involved in a probate in California, it’s advisable to work with an attorney who has experience in California probate law to ensure that the process is handled correctly and efficiently.
WHAT DOES A PROBATE REFEREE DO?
In California, a probate referee is a neutral and court-appointed official who is responsible for appraising and valuing certain assets in a probate case. The probate referee’s primary role is to provide an objective appraisal of assets subject to probate, such as real estate, stocks, and bonds, that require a valuation.
The probate referee is appointed by the court and is typically a licensed appraiser or experienced real estate agent. The probate referee must be impartial and may not have a financial interest in the estate.
Once appointed, the probate referee will conduct an appraisal of the assets and provide a written report of their value to the court. The probate referee’s valuation is typically considered to be an independent and unbiased assessment of the fair market value of the assets, which can help resolve disputes over the value of assets and ensure that the estate is distributed fairly.
It’s important to note that not all assets in a probate case require a probate referee. For example, assets that have a readily ascertainable value, such as bank accounts and investment accounts, may not require a probate referee’s appraisal.
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