Probate* can be complicated so we thought it would be helpful to share what we've learned. Probate is a legal process that occurs after an individual has passed away, which involves the authentication of their last will and testament - assuming one exists. The primary objective of probate is to ensure that the decedent's assets are distributed according to their wishes as set forth in their will, or, if no will exists, in accordance with the laws of intestacy - dying without a will - which vary by state.
Verification of the Will: A court must first verify that the decedent's will is valid. This typically involves confirming that it was created voluntarily, without duress, and with the sound mental capacity of the individual.
Appointment of an Executor or Administrator: The court appoints an executor as named in the will or, if there is no will, an administrator. This individual is responsible for guiding the estate through the probate process.
Inventory of the Estate's Assets: The executor or administrator must identify and catalogue all of the decedent's assets, which may include real estate, bank accounts, stocks, bonds, personal property, and other assets.
Payment of Debts and Taxes: Before assets can be distributed, the executor must ensure that all debts, taxes, and final expenses of the estate are paid.
Distribution of Assets: Once debts and taxes have been settled, the remaining assets are distributed to the rightful beneficiaries, as dictated by the will or by state law (if no will exists).
Property owners can bypass or minimize the probate process by setting up a plan for their estate. An estate can include a mansion on 10 acres, a small single-family home or a condo, bank accounts and investment accounts. Some individuals choose to plan their estate in ways that can bypass or minimize the probate process.
Common methods to plan an estate include:
Living Trusts: Property owners can transfer their assets to the trust, which they manage as the trustee, while they're alive. Upon their death, the named successor trustee can transfer the property to the trust’s beneficiaries without probate court involvement.
Payable-On-Death and Transfer-On-Death Accounts: Banks and other financial institutions offer payable-on-death (POD) accounts, whereas some states allow transfer-on-death (TOD) registration for real estate or vehicles. These designations allow assets to be transferred directly to the named beneficiary when the owner dies, without going through probate.
Joint Ownership: Property that is owned jointly with the right of survivorship automatically passes to the surviving owner.
Gifting Property: Giving property away before death effectively removes it from the estate, thereby avoiding probate. However, there may be gift tax implications, and this strategy may not be suitable for those who need to retain use of their property or income from it.
As a Certified Probate Real Estate Specialist (CPRES) Heyler co-owner Jae Wu and her team are ready to help answer any follow-up questions. Please email her at [email protected] or call 310-470-2030.
To learn more about what a Trustee does, visit this article.
*The summary of the probate process is provided for informational purposes only, and should not be relied upon or considered advice on any matters of law. If you have questions regarding trusts, estates and probate please consult with a qualified California attorney.
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