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.
Is Probate Always Required in California? www.norcalplanners.com 6
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.
Is Probate Always Required in California? www.norcalplanners.com 7
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
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