It can seem as though the utilization of a last will is the simplest and most efficient way to transfer assets. A trust can seem like something that is much more complicated.
In fact, when you use a will, the heirs to the estate don’t receive their inheritances until the estate has been probated. The probate court supervises the administration of the estate unless you take steps to avoid probate.
There is a caveat to the above. In the state of California there are some probate shortcuts that can be taken under certain circumstances. If you are transferring assets to your spouse or a qualified domestic partner, you can do so outside of the full process of probate through the utilization of a Spousal Property Petition.
If the estate in question is valued at no more than $150,000, it may be possible to transfer property through the utilization of a simple affidavit or a simplified probate process.
Probate Avoidance Strategies
If your assets do exceed $150,000 in value and you want to transfer assets to someone other than your spouse, you can still avoid probate. There are various different ways that you can go about it.
A revocable living trust is one possibility. When you convey assets into this type of trust you do not surrender control of the resources. You as the grantor of the trust may actually act as the beneficiary and the trustee while you are living. You can revoke the trust, and you can change the terms as you see fit.
You name a successor trustee and a successor beneficiary (or beneficiaries) when you are creating the trust agreement. After you die, the trustee distributes financial resources to the beneficiary outside of probate.
There are other vehicles of asset transfer that can be utilized if you want to avoid probate. The optimal course of action will vary depending on the circumstances.
Some of these probate avoidance tools are simple on the surface, but they can be risky. For example, you could add someone to the title of property that you own. This person would become a joint tenant.
After you die, the joint tenant would assume ownership of the entirety of the property outside of probate.
This can sound appealing. However, when you make someone a joint tenant, you are handing over partial ownership immediately. Therefore, creditors or litigants could seek to attach the property held in joint tenancy if your joint tenant was to run into financial problems.
In addition to this, the joint tenant would have to agree if you wanted to sell the property.
If you would like to discuss probate avoidance with a licensed estate planning attorney, contact our firm to schedule a free consultation.
To learn more, please download our free California probate report here.
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