Probate is the process by which an individual’s estate is administered after their death in California. The probate process involves submitting the decedent’s Last Will and Testament to the court, after which an executor, typically named in the will, carries out the wishes that are set out in that document with the oversight of a judge. The process can be time-consuming and expensive in some cases, so many individuals and families will structure their assets and estate plans to avoid probate. One way to avoid probate is to ensure that an estate is small enough to qualify as a “small estate” under California law. Estates that are small enough to fall below the state’s threshold do not have to go through the formal probate process, and instead can be administered through a more streamlined method. Learn more about small estate administration and other options to avoid probate from the experienced estate planning attorneys at Von Rock Law by calling (866) 720-0195 to schedule a personalized consultation to discuss your estate planning needs.
What Is a Small Estate Under California Probate Law?
The probate process delays loved ones’ receipt of assets. Probate can also be expensive because it may involve hiring an attorney, paying fees to the court, and discharging tax obligations. Many people choose to structure their estate plan with the overall goal of avoiding probate. There are a number of methods to avoid probate, and one of the avenues that Californians can use is to ensure that the overall value of their estate is below the threshold for a “small estate.”
Size of Estate
The California Probate Code provides that estates valued at less than $166,250 (as adjusted periodically) can avoid probate as long as 40 days have passed since the death of the decedent. This threshold amount is adjusted for inflation every three years, standing at $184,500 for the estates of decedents who died following April 1, 2022, according to the Superior Court of California. For these smaller estates, an alternative procedure (as discussed below) is pursued instead.
Succession by Affidavit
California law gives successors the ability to any and all of the following:
- Collect property or money that is due to the decedent
- Receive property from the decedent
- Transfer evidences of debt, obligations, and interests to others, including third parties
The process to do this involves submitting a relatively simple affidavit to the court. This affidavit can the place of the entire probate process when submitted correctly; however, careful completion of all steps is required in order to achieve this outcome.
How Do I Determine Whether an Estate Is a Small Estate?
To determine the value of an estate, a successor or other interested party must first determine the total combined value of all of the assets in the estate. Depending on how organized the decedent may have been, this valuation process can be somewhat cumbersome.
Getting a Valuation for the Estate
Valuation might involve things like having property evaluated by an appraiser. However, the successor can also make a good faith estimate of the value of the property as well. Good faith estimates should be based on the value of the items as if the putative were selling them at a garage sale, not the purchase price of the item.
Interested parties should remember that the value of an estate is based on the value of the property as of the date of the decedent’s death, regardless of when the valuation actually takes place. This is important because the valuation might not actually occur until months or even years after the decedent passes away.
Excluded Assets
Some assets are not “counted” when calculating the total value of an estate. The California Probate Code establishes that the following assets are not included in the estate value calculation:
- Property held as a joint tenant or property owned by multiple parties
- Certain vehicles, mobile homes, and boats
- Property held in a living trust
- Life insurance, death benefits, and other assets that are not subject to probate (such as payable on death accounts or transfer-on-death deeds)
- Amounts owed to the decedent for service in the armed forces
- Amounts owed to the decedent for wages, salary, or other compensation
- Other assets that go outright to a surviving spouse
Determining which assets to include can be difficult. However, the California probate lawyers at Von Rock Law may be able to help individuals and families determine whether this small estate probate process is an option in their situation.
Handling Real Property in Small Estates Within California
Real property should be included in the calculation to determine if the estate qualifies as a small estate. However, the small estate method cannot actually be used to transfer real property.
If an individual passes away in possession of real property that is not automatically transferred on their death to a spouse or to a joint owner through right of survivorship, then it may not be possible for their survivors to use the small estates designation to avoid probate, regardless of the total value of assets contained in the estate. For this reason, individuals seeking to avoid probate for their loved ones will sometimes place real property in a trust. Assets contained in an irrevocable trust are not considered part of an estate, and are therefore exempt from probate.
Addressing Liabilities
Liabilities are not considered when calculating the value of the small estate. In some instances an estate’s liabilities may exceed its assets, and the estate will still need to go through the formal probate process. Only the assets are relevant to calculating the value of the estate for purposes of qualifying as a small estate in California.
Small Estate Affidavits: The Procedure To Avoid Probate
To administer a small estate, a successor needs an affidavit that provides specific information to creditors or others who hold a claim on the decedent’s property. Instead of filing the affidavit with the court, the successor simply provides the affidavit and any supporting documents to the person, company, or financial institution that holds the decedent’s property to effectuate a transfer to the successor.
The affidavit will set out that the successor is using the small estate process, provide a valuation calculation of the estate, and offer a statement about whether there are other potential successors to the estate. The affidavit must be notarized by a notary, and the affiant must attach valuations or inventories of the personal property in the estate. This document must be signed by the successor under penalty of perjury.
Get Help With Small Estates To Avoid Probate in California
Some individuals and families can structure their estate to ensure that their estate is small enough to avoid probate and qualify for the small estate probate process. You may be able to learn more about whether this is an option for you and your family by contacting Von Rock Law. Call (866) 720-0195 for more information or to schedule an appointment today.
