Probate is the court-supervised process that oversees the payment of your final creditors and the distribution of your assets upon death. Because it is a court procedure, the fair market value of everything you owned at death and the beneficiaries of your assets become public record. Furthermore, in California, probate is typically time-consuming (about nine to twelve months on average) and expensive (statutory attorney fees are 4% of the first $100,000; 3% of the next $100,000; 2% of the next $800,000; and 1% of the next $9 million).
You are ordinarily subject to probate if the fair market value of assets titled in your name exceeds $100,000 or if you have any real property in excess of $20,000. However, the manner in which your assets are titled is key. The most common and popular estate planning strategy in California is to re-title your assets to a revocable living trust. By doing this, you retain control over your assets while living and at death you can entirely avoid probate. This strategy hinges upon making sure your assets are re-titled to your trust and is why I perform this important task for all of my clients.
Occasionally, clients die with some assets titled to their trusts and some assets titled to their individual names. In this scenario, it is important to review how each asset is titled and the total fair market value of non-trust assets to determine whether a probate is necessary. I have seen cases where the attorney cuts corners by not verifying that all assets are subject to probate and commences probate proceedings unnecessarily. At the other end of the spectrum, I once had a client who was sure his deceased mother had over $100,000 in non-trust assets based on the most recent bank statements he could find. Rather than jumping to conclusions and immediately starting a probate, I suggested we write letters to the banks to double check the date of death values of the accounts. As it turned out, one account was titled to the trust and another account was closed six months prior to the decedent’s death. As a result, there were less than $100,000 in non-trust assets and we were able to avoid a probate all together.
Re-titling your assets to your trust during the planning stage and carefully verifying the title and value of a person’s assets at death are the fundamentals of avoiding probate. At both stages, careful attention to detail and a comprehensive approach are crucial elements of good legal service.