What is probate?
It is a legal process that takes place when assets are being transferred after someone dies. The probate court provides supervision while the estate is being administered. If a will has been executed, the executor that is named in the document would act as the administrator. The court will appoint a personal representative if there is a will but no executor designation, and they would appoint a representative if the decedent died without a will.
What is the purpose of probate?
seeking payment. This is one of the functions, and there is a proving of the will. The court will examine the document to ascertain whether or not it is valid. If someone wants to contest the validity of the will, they could make a case while the estate is being probated by the court.
What are the requirements for a valid will in California?
You have to be at 18 years of age or older or an emancipated adult to create a will that is valid in California, and you must be of sound mind. The will has to be signed in front of two witnesses, and they have to sign it when they are together. This can be immediately after the testator has signed the will, or they can sign it together when they are witnessing the testator acknowledge the will. There is no notarization requirement, and a handwritten or holographic will can be valid in the state of California (but they are not recommended).
What types of asset transfers are not subject to probate?
When you establish a bank account or a brokerage account, you can add a beneficiary. This is called a payable on death or transfer on death account. If you do this, after your passing, the beneficiary would present the death certificate and assume ownership of the account. In California, you can select the payable on death option when you are registering your car. In a sense, individual retirement accounts are payable on death accounts because you name a beneficiary. Payable on death transfers are not subject to the probate process, and this would apply to all the different types of payable on death accounts. If you are the beneficiary of a life insurance policy, the company will remit the proceeds to you after the policyholder’s death if everything is in order. The probate court would not be involved. Joint tenancy is the condition of co-ownership of property. When one joint tenant passes away, the surviving joint tenant would inherit their ownership interest, and this would be a probate-free transfer.
Is there any reason to try to avoid probate?
Yes, many people implement probate avoidance strategies when they learn about the drawbacks, and one of them is the time consumption. The beneficiaries receive nothing while the estate is being probated by the court, and it will take about nine months at minimum. Probate expenses enter the picture as well. There can be appraisals and liquidation charges along with legal and accounting fees. The court charges a filing fee, and the executor is entitled to remuneration for their time and effort. These expenses reduce the value of the estate, and there is also the privacy factor. Probate records are available to anyone that has an interest because it is a public proceeding.
How do you proactively avoid probate?
You can use a living trust instead of a will as the centerpiece of your estate plan. While you are living, you would be the trustee, and you would retain the right of revocation. The assets would be accessible to you, and you could dissolve the trust entirely if you choose to do so. After your passing, the successor trustee that you name in the trust declaration would distribute assets to the beneficiaries in accordance with your wishes. Probate would not be a factor.
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