When the subject of estate planning comes up in conversation in California, someone often mentions the goal of avoiding probate. But what exactly is probate, and why is it something to be avoided?
Probate is basically the court-supervised process of gathering a deceased person's property, identifying heirs, paying off debts and distributing the balance of the property to the heirs and beneficiaries. Avoiding probate is important in California for two reasons. First, probate fees are expensive in this state. Second, probate is a public proceeding and can make a person's private financial matters available for anyone to see.
There are several ways to avoid probate in California. A living trust is one of the most popular strategies. When assets are put in a trust during the person's lifetime, they are transferred upon death to the beneficiaries named in the trust, without going through the probate process. Assets can also be titled in joint tenancy with the right of survivorship; upon one joint tenant's death, these assets will pass to the other joint tenant.
With some assets like bank accounts and investment accounts, it is possible to avoid probate by naming, in the account documents, a beneficiary to whom the account will be transferred upon the owner's death. As we discussed in a recent post, California recently enacted a law which allows a home to be transferred in this manner, using a Transfer on Death deed.
Anyone contemplating estate planning in California should consider strategies to avoid probate. An experienced estate planning lawyer can help a person prepare a plan that works best for their situation.
Source: FindLaw, "Avoiding Probate FAQs," accessed Oct. 24, 2015