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Avoiding Probate

Oakland Probate Attorney

Probate can be expensive, and it is subject to the supervision of the Superior Court. It can also be time consuming; it takes at least six months, and could take well over a year in some circumstances. It is sometimes possible to completely avoid probate. If the value of your estate is less than $100,000, you may be able to use a process called Summary Administration. The value of your estate is a legal term that incorporates some of your property and not other property. The information below will give a good idea what types of property will be included in the value of your estate.

In some circumstances, it is better to use a probate proceeding than not. If you have more debt than you have assets, it might make more sense for your family to use a probate proceeding, so a judge can determine what your family receives and what your lending institutions will receive.

This is not legal advice, it just information for you to consider before drafting your will.

1. What is summary administration?

Summary administration is a common method of avoiding probate. Summary administration allows for the collection or transfer of a small estate without going through probate.

Summary administration can be used only if the descendant’s personal property in California is worth less than $100,000. Instead of going to probate, the beneficiary can collect the property by executing an affidavit.

This affidavit may be used to collect any kind of personal property and evidence of debts. The affidavit must be signed by all persons who have an interest in the property and a certified copy of the death certificate must be attached.

It is important to recognize that the affidavit provides for informal distribution of the assets and
payment of debts. Unless the will is admitted to probate by the court, the person named as executor in the will is not acting in a legal, official role, but is only acting informally.

It should also be noted that if summary administration is used instead of probate, the individual beneficiaries who receive the assets of the estate through summary administration are personally liable up to the amount of the asset they receive for the debts of the estate. For example, if Todd leaves $20,000 in a bank account for Jane and owes $30,000 to BMW, if Jane takes the money from the account before the debts are paid to BMW, she can be held liable to BMW for up to $20,000.

2. How do I know if the value of the estate is worth less than $100,000?

Not all of the decedent's actual property is included when determining whether the value of the estate over $100,000.00. There are several ways to decrease the value of one's estate so that it does not reach this level.

3 . What are the common methods of reducing the value of an estate? Listed below are the most common methods for decreasing the value of your estate. They all involve some level of risk and may not work well for your family, but can give you an idea of what your attorney might recommend.

(a) Gifts

The first and most obvious way is to give away parts of the estate before death. A donor may give away assets valued up to $10,000 per person per year without incurring federal tax liability.

If you are considering decreasing the value of your estate through gifts, keep in mind that large gifts given immediately before death might create concerns about lack of capacity, leading to a potential will challenge.

(b) Joint tenancy

Assets held by two joint tenants will pass automatically to the surviving joint tenant when the first one dies. For instance, if you and your spouse own a house as joint tenants and you die, your spouse owns the house. The value of the house will not be included in the value of your estate for summary adjudication issues.

Many types of property can be held in joint tenancy, they include: bank accounts, stocks and bonds, cars, and real estate.

There are two issues to keep in mind when you are considering changing property into joint ownership: the cost and possible tax liability and that the joint owner will have legal access and control over the property.

Costs and taxes: Transferring property may require recording fees, and may cost money to prepare the deeds of transfer. Also, there may be federal tax liability if the value of the property is subject to inheritance tax.

Joint Ownership can be Risky: If you wish to transfer a bank account or other asset to a joint tenant, you should choose someone in whom you have complete trust. A joint tenant has the power to completely deplete a bank account without the original owner's approval. If you transfer title on a house, you will need the joint owners consent to change title or sell the property. Creating joint tenancy should always be done carefully and thoughtfully.

(c) Pay on Death Accounts

A pay on death account, or Totten Trust, directs a bank to pay the proceeds of the account to a specified person if the account holder dies. The value of the pay on death account is not included in the value of your estate. Pay on death accounts cannot be given away in a will, so if you change your mind about whom you want to receive the money, contact your bank.

(d) Life insurance

If you assign a beneficiary to your life insurance policy, the value of the policy will not be included in the value of your estate. If you do not name a beneficiary on your life insurance policy, or direct the policy to pay your estate, the value of the policy will be considered part of the value of your estate.

Also, it is important to note that a will cannot change the beneficiary of your policy. If you want to change the beneficiary, you have to change it with your insurance company.

(e) Inter vivos trusts

Creating an inter vivos trust is another method of avoiding probate. It also avoids the need for a conservatorship, as well as a durable power of attorney for finances. It is mainly used for tax avoidance. The main disadvantage is that it can be expensive to create and difficult to maintain. Generally trusts are only useful when there is a fairly large estate to begin with.

summerall law
Summerall Law, P.C. - Oakland Estate Planning Attorney
Located at 3873 Piedmont Avenue, Suite 8,
Oakland, CA 94611
Phone: (415) 944-9406
Local Phone: (415) 944-9406

The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.

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