California Probate, Estate and Trust Administration

California Probate | Estate and Trust Administration

Probate and estate administration are the processes through which estate assets are transferred after death. When probate avoidance planning has not been implemented prior to death, California will require a probate court proceeding if the deceased was a California resident or owned assets in California. California probate can be supervised or unsupervised. In an unsupervised probate, the appointed estate administrator manages assets, pays any debts, files required tax returns and various court documents, and distributes the estate assets. However, the court may at any time require the process be supervised (usually when someone expresses concern about the estate administration). In a supervised probate, every detail of the estate administration must be approved by the probate judge.

California Probate Avoidance

Because California probate can be a lengthy, costly and public process, many people choose to avoid it. There are a number of legal strategies that will allow you to pass property to another person after death, without going through probate.

Joint Tenancy & Community Property Adding another person to your assets as a joint owner or "joint tenant with rights of survivorship" will allow your property to pass to them upon your death without going through probate. There are pitfalls to this strategy, however, including the fact that in California, each owner must own an equal share of the asset. This means they will have access to the asset (such as a checking account) while you are alive. Also, the asset could be subject to any claims (such as lawsuits) against the co-owner and available to the co-owner's creditors -- all while you are still alive and planning on using the asset yourself. While there is no difference between a joint tenancy between married couples and strangers, such as titling of assets may be deemed to be "community property" where by each party owns the undivided whole of the property. When titled in "Community Property" the entire interest in the property passes from one spouse to the other at the death of the first spouse and no probate is required although certain termination documents will need to be recorded for real property. Neither one of these designations helps pass property without probate if both spouses die simultaneously in which case, without a trust, the estate would have to be probated.

Beneficiary Designations California allows Transfer on Death (TOD) or Pay on Death (POD) beneficiary designations to be added to bank accounts. Beneficiary designations like these are preferable to joint tenancy in that they allow you to transfer property upon your death without giving away current ownership. One of the drawbacks, however, is that it can be difficult to obtain an equitable distribution of property among your heirs by utilizing beneficiary designations. Additionally, understand that if you have beneficiaries listed on your assets, those assets will be distributed upon your death to the listed beneficiaries, even if your last will and testament states otherwise.

Revocable Living Trust A Revocable Living Trust is a legal document that allows you to establish a separate entity (the trust) to "hold" legal title to your assets while you are alive, and to name trustees to manage those assets according to the trust terms. Typically, you serve as the trustee while you are alive, managing your assets for your own benefit. Upon your disability or death, the trust terms name your successor trustee to continue to manage -- or distribute -- the assets held in trust. A properly drafted trust can accomplish many goals, including guardianship and probate avoidance for your estate and bloodline, marital and creditor protection for your children.

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California Estate and Trust Administration

A properly drafted and funded trust will generally avoid probate. The trust need not be filed with the probate court. Nonetheless, there are still steps necessary to administer the trust: beneficiaries must be contacted; assets must be gathered, valued and managed; potential creditors must be notified; debts, taxes and final expenses must be paid; and, ultimately, any remaining income and assets must be distributed in compliance with the trust terms.  Successor trustees often lack the time, resources or knowledge to personally administer the trust, and therefore may call upon legal, accounting and investment professionals for assistance. Tierney, Watson & Healy can help your successor trustee(s) deal with the complexities of administering your trust. Please call our office and we'll be happy to schedule a consultation, whether or not our office has drafted the original trust.

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