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Elderlaw: 12/01/2009

Elder Law Advocates



Dear Len & Rosie,

I have heard conflicting information about trusts vs. wills regarding probate. If you only have a will, does it have to go through probate in California? If so, how long does that process take and how much does the family “lose” to probate?

Charlotte

Dear Charlotte,

The answer to the question “Is my estate going to pass through probate?” does not depend on whether or not you have a will. The need for probate depends on the value of your probate estate, which consists of everything titled in your name upon your death, outside of a trust, and without joint tenants or pay on death beneficiaries.

If the total value of your estate is less than $100,000, your heirs can collect your estate 40 days or more after your death, with small estate declarations described in section 13101 of the California Probate Code. Many banks have their own forms for this, so a lawyer may not be needed at all. Transferring real property of small value is harder. Your heirs will have to have the property appraised by a California Probate Referee and petition the court. But it’s still a lot easier, faster, and cheaper than a full-blown probate.

If the total value of your estate is $100,000 or more, then probate is necessary. Probate is time-consuming and typically takes anywhere from 12 to 18 months. Probate is also expensive. Probate lawyer fees are set by statute as follows:

4% of the first $100,000

3% of the next $100,000

2% of the next $800,000

1% of the amount above $1,000,000

The lawyer for a modest $500,000 estate gets paid $13,000. Since the executor gets the same amount, the total fee is doubled to $26,000. And this does not count “extraordinary” fees that are routinely approved by the court for “extra” work such as selling your home.

How can you avoid this? The operative word here is “estate.” Assets in your probate estate must pass through probate or by small estate declarations and petitions. The trick is to hold title to your assets outside of your probate estate so they will not be subject to probate after your death.

You can avoid probate by holding title to your assets in joint tenancy with your heirs, or by using bank account pay-on-death beneficiary designations. Surviving spouses inheriting an estate can also avoid probate with a Spousal Property Petition. The problem is that joint tenancy can backfire. Your children may decide to take the money and run – it happens sometimes. Also, if your children are on title to your home, you’ll have to ask them permission if you want to sell your home or take out a new loan. Your home could even be subject to the claims of their creditors.

For these reasons, the best way to avoid probate is with a revocable trust. Trust assets are not part of your probate estate and are therefore not subject to probate. A revocable trust is also completely under your control so you will not have to seek your children’s approval for what you do with your own property.

Len & Rosie



Len Tillem and Rosie McNichol are elder law attorneys. Contact them at 846 Broadway, Sonoma, CA 95476, by phone at (707) 996-4505, or on the Internet at www.lentillem.com. Len also answers legal questions each weekday, Noon-1 p.m. and Sundays, 4-7 p.m. on KGO Radio 810 AM.
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