In a perfect world, everyone with any assets or inheritable possessions would have some type of will or trust put into place, and update it regularly. By doing so, it notably streamlines the inheritance process and the distribution of assets upon their death.
However, probate lawyers handle cases day-in and day-out when individuals die without a will, or the existing wills were outdated, or wills were poorly executed or maintained and are contested in court. In those cases, certain assets become the property of the state until they move through the legal probate process.
Assets That Remain Separate From Probate
If you wind up in a position where someone you love dies, and they haven’t left a will, trust or any legally valid instructions, you may wind up going through the state’s probate court to receive your share of the assets. The good news is that some assets do not have to go through that process, which simplifies things.
If it turns out that you have to go through the probate process to receive your inheritance, it’s a good idea to hire an estate planning attorney to make the process as streamlined as possible – in terms of time, energy and financial costs.
Properties or assets that are held jointly
Any property or assets held jointly, via a title or a legally binding document, are simply inherited directly by the living person(s) on the title. Since California is a community property state, this often means the majority of the decedent’s assets pass directly to the surviving spouse.
Exceptions include if other names appear in the transfer-on-death (TOD) or payable-on-death (POD) sections of financial accounts, investments, securities, and so on.
Additional assets that don’t need to go through probate include:
- Retirement accounts, like IRA’s and 401(k), that have a named beneficiary(ies)
- Any property held in a living trust
- Pension plan distributions (sometimes, in situations where the pension was part of a divorce agreement, beneficiaries receive the decedent’s share as long as the ex-spouse is still living)
- Vehicles that go to immediate family members as per state law
- Property owned as community property with right of survivorship or joint tenancy
- Wages, salaries or commissions owed to the deceased (up to a certain point)
- Household items and goods that go directly to family members (this can be complicated if surviving family members can’t agree regarding precious and/or valuable heirlooms)
- Any accounts, titles, securities, vehicles or toys, etc. that have a POD, TOD, or stated beneficiaries clause.
Assets That Must Go Through Probate
In the state of California, if beneficiaries are in complete agreement, and the value of assets that would typically move through a probate court has a total value of $150,000 or less, those assets do not have to move through probate.
In this case, you need a simple sworn affidavit to legally claim the assets, OR you can elect to go through a streamlined, summary probate process. Again, a single consultation or two with a probate lawyer ensures everything moves through the proper, legal channels.
If the value of the following assets comes to more than $150,000, they become a “probate estate,” and the estate is handled by the probate court. These assets include:
- Any financial accounts, retirement holdings, investments, securities, etc., that do not have named TODs, PODs, or beneficiaries listed, OR if all of the named beneficiaries are deceased
- Properties and vehicles that were owned solely in the name of the deceased person and acquired before a marriage took place (any properties or assets acquired during a marriage pass directly to a surviving spouse in the state of CA unless a will or other legal documents specifies otherwise)
- Shares of any properties or businesses held jointly with someone else (“tenants in common”), so if your deceased mother and a sibling owned property or business together – each with their own share(s) – your mother’s share would move through probate
Are you lost in a quagmire of what assets should be distributed free of probate, and which ones need to move through probate court? Contact the probate attorneys at Tseng Law Firm. Our goal is to make the probate process as transparent, simple and fair as possible. We’re here to help.