Is Probate Always Required in California? www.norcalplanners.com 1

IS CALIFORNIA PROBATE ALWAYS

REQUIRED?

“There is a legal process called probate that plays a very big

role in the estate planning field.”

TIMOTHY P. MURPHY

NORTHERN CALIFORNIA CENTER FOR ESTATE PLANNING AND ELDER LAW

Is Probate Always Required in California? www.norcalplanners.com 2

You may assume that assets can be distributed immediately after you die if you

create a will, but this is really not the case. The estate must be probated before

the heirs can receive their inheritances when a will is utilized to transfer assets.

Probate is in place to provide oversight, but it is time-consuming, and it can be

expensive. As a result, it does not always benefit the heirs to the estate.

Property that is considered to be probate property would be subject to the

process. However, there are some types of transfers that are not subject to the

probate process. We will look at some of them in this paper.

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PAYABLE ON DEATH ACCOUNTS

A payable on death (POD) account is an account that has a beneficiary. These

accounts are offered at banks and many brokerages. Sometimes this type of

account is called a transfer on death (TOD) account.

The beneficiary cannot access the resources in the account while the primary

account holder is living, so there is no immediate loss of control. After the death

of the primary account holder, the beneficiary would inherit the remainder that is

left in the account, and the probate court would not be involved in the transfer.

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Though a payable on death account can sound great on the surface, there are

numerous limitations. If you want to provide for your loved ones in a truly

comprehensive and efficient manner, you would want to explore other options.

LIFE INSURANCE PROCEEDS

If you have a life insurance policy on your life, the company will pay the

beneficiary or beneficiaries in a direct fashion after you pass away. The process

of probate would not be a factor. However, like POD and TOD accounts, direct

payments of life insurance to certain beneficiaries can be very problematic (for

example, minors and disabled persons, among others).

JOINT TENANCY

Joint tenancy is the condition of co-ownership. For example, if you own your

home, you could choose to make your son a joint tenant. You would add your

son to the deed or title of your home, and he would own half of the property.

After you die, your son would inherit your portion of the property as well, and he

would be the sole owner of the property. This transfer would not be subject to

the probate process.

Once again, joint tenancy can sound like a good solution on the surface, but it is

a risky proposition. When you add a joint tenant to the title of your property, this

individual owns half of the property immediately, even while you are living.

As a result, if the joint tenant that you added was to encounter legal or financial

difficulties, his or her portion of the property could be subject to attachment by

the IRS or a judgment creditor. Plus, you could not sell the property without

working something out with the joint tenant, and this can limit your financial

flexibility. There are also other complicating factors.

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REVOCABLE LIVING TRUSTS

Some people are

proactive about the

implementation of

probate avoidance

strategies. A very

effective probate

avoidance tool is the

revocable living trust.

You do not have to be

wealthy to benefit from a

revocable living trust. As

the creator of the trust,

you can act as the

trustee and the beneficiary throughout your life. You retain control, and you can

revoke or dissolve the trust if you choose to do so.

In the trust declaration you name a successor trustee to take over the role after

you die, and you also name a successor beneficiary or beneficiaries. After your

passing, the successor trustee would follow your instructions and distribute

assets to the beneficiaries outside of probate.

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SUMMARY

The process of probate can come into play when property that was in the sole

and direct personal possession of the decedent is being transferred. This process

serves a purpose, but there are certain inherent drawbacks.

Some types of property transfers are not subject to the probate process. Payable

on death accounts facilitate probate avoidance; property held in joint tenancy

can pass outside of probate; and insurance policies are not subject to the

probate process.

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Revocable living trusts are also very popular among people who want to avoid

probate, but there are other possibilities. The optimal course of action will

depend upon the circumstances.

To learn more about probate and probate avoidance, set up a consultation with

an experienced and qualified estate planning attorney.

REFERENCES

Forbes

http://www.forbes.com/sites/janetnovack/2012/10/14/the-forbes-guide-to-

estate-planning/

Cornell University Law School Legal Information Institute

http://webserver.rilin.state.ri.us/Statutes/TITLE33/INDEX.HTM

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About the Author

Timothy P. Murphy

Timothy P. Murphy is an estate planning and elder law attorney

whose practice emphasizes helping people to build, preserve

and pass on their wealth. He works with his clients to

accomplish their goals while avoiding unnecessary court

proceedings and minimizing or eliminating exposure to death

taxes. Mr. Murphy also assists families facing the myriad of

problems associated with dealing with a loved one’s declining health and rising

needs for care. He has practiced law in the Sacramento area for over 32 years,

first with a large firm, and then with his own firm since 1987.

Tim has written a regular column on legal issues for Senior Magazine. He also

was a regular featured guest on the Money Experts radio program heard locally

on KFBK (AM 1530). Tim has been featured in the Sacramento Bee, Sacramento

Business Journal, Sacramento Magazine, Comstock’s Magazine and other

publications on estate planning and related topics. He also assisted local Channel

3 (KCRA) in an investigative report on the trust mill problem in the Sacramento

area and was featured on Channel 10 (KXTV) in its series on personal financial

planning.

Northern California Center for Estate Planning and Elder Law

www.norcalplanners.com