Probate is the legal process that takes place when your last will is admitted to the probate court. There are some pitfalls that go along with the process of probate in California.
For one thing, probate is a public proceeding, so prying eyes can access probate records and find out exactly what went on during the process. Many people would like to keep their final affairs confidential.
Time is another factor. You probably want your assets to be distributed to your heirs in a timely manner. This may be a preference, but under some circumstances it may be a necessity.
Immediate asset transfers will not be forthcoming when probate is a factor. Exactly how long it will take is going to vary depending on the complexity of the case in question. At minimum it will take months, and in some complicated cases probate can drag on for multiple years.
There are also considerable expenses that can add up during the probate process.
When you hear about these drawbacks, you may wonder if it is possible to arrange for the transfer of your assets outside of the probate process. The answer to this question is yes, probate can be avoided in a variety of ways, because you don’t have to use a will to arrange for the transfer of your monetary assets.
You could simply give away assets to people on your inheritance list while you are still alive. As long as your assets do not exceed the unified gift/estate tax exclusion amount, you could do this without incurring any transfer tax expenses.
However, this is a slippery slope because you need to provide for yourself throughout your life, and you may not be able to project your own financial needs accurately.
It is possible to create bank or brokerage accounts that allow you to include the selection of a beneficiary or beneficiaries. With these accounts, called payable on death or transfer on death accounts, the beneficiary assumes ownership of the assets in the account after you pass away. This transfer would take place outside of probate. There can be drawbacks to this as well if you are worried about providing asset protection for your heirs.
Under many circumstances, the best way to arrange for asset transfers outside of probate would be through the creation of a revocable living trust. While you are still living, you maintain control of the resources that have been conveyed into the trust.
When you are drawing up the trust agreement, you name a beneficiary or beneficiaries who will receive distributions from the trust after you die. You also include the selection of a trustee to administer the trust.
After you pass away, the trustee distributes monetary assets to the beneficiaries in accordance with your wishes. The probate court is not involved, so the beneficiaries receive their distributions in a timely fashion.
Our office regularly offers free living trust seminars for residents of San Jose, Campbell, Los Gatos, Saratoga, Santa Clara, Sunnyvale, Cupertino, Aptos, and surrounding areas. To view our current seminars, follow this link: Free Living Trust Seminars
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