Tips for Avoiding Probate

At the Campbell Law Offices, our estate planning attorneys practice extensively in the drafting of wills and the administration of estates for clients in Oakland and the Bay Area.  In doing a great deal of work in probate, including litigation, we understand firsthand the pain and strife which often accompanies a lengthy, costly probate process.  Probate avoidance is a legitimate goal of estate planning and should be considered along with other needs and goals in developing a comprehensive estate plan.

Why avoid probate? 

In most cases, probate is an expensive and time-consuming process for distributing an estate.  Probate can take a year or more and costs tens of thousands in court costs and statutory fees.  Also, when an estate is probated, all of the assets become a matter of public record.  People who want to keep their financial affairs private are advised to avoid probate administration.

Tips for Avoiding Probate

In general, an estate must be probated if it is valued at $100,000 or more, or if it contains real property (land, houses, buildings�) valued at $30,000 or more.  If your estate falls below the statutory threshold, then a full probate proceeding will most likely not be necessary.  Below are some of the most popular mechanisms for avoiding probate:

Trusts - Once a trust is created and properly funded, legal title to the asset passes to the trustee, who manages the property for the benefit of the beneficiary, who holds equitable title.  The person who created the trust, the grantor, no longer holds title to the asset, so it is no longer included in the grantor's estate for probate purposes.  This is true for all types of trusts, whether or not the grantor is also the trustee, or even if the grantor is the beneficiary of the trust during the grantor's lifetime.

Insurance policies - Since an insurance policy names a beneficiary in the policy itself, the policy is self-proving, and the proceeds of the policy can pass directly to the beneficiary without the need for probate.  However, make sure the policy includes a contingent beneficiary as well as a primary one.  If the named beneficiary is deceased and a contingent beneficiary is not named, probate may be required to determine who should receive the death benefit from the policy.

Retirement plans - Like insurance policies, most retirement benefit plans have beneficiary designations.  IRAs, 401(k)s, Keoghs, and other retirement and pension plans may be distributed to the decedent's spouse or beneficiary without passing through probate.  Making maximum contributions to these funds is an excellent way to minimize taxes, provide for retirement, and avoid probate. 

Jointly-titled property or community property with right of survivorship- When property is held in joint title, or in community property with right of survivorship (cpwrs), then upon the death of one property owner (or spouse, in the case of cpwrs) the full interest in the property belongs to the surviving co-owner or spouse, without the necessity of probating the property.  Holding property jointly or as community property has certain legal implications in the event of a lawsuit or divorce, so be sure you consult with a knowledgeable attorney about your options.

Jointly-held bank accounts - Like jointly-titled property, ownership of a joint bank account will pass to the surviving co-owner outside of probate.  Another type of bank account, called a Totten Trust, can be used by one person only, with the balance transferring to a named beneficiary on death of the depositor.

Seek Experienced Legal Representation

Probate avoidance is a worthy goal, but it is not the only reason nor even the primary reason to do estate planning.  Definitely consider probate avoidance when creating your estate plan, but make sure that every decision you make fits in with your overall strategy and decisions about how you want your estate to be handled.  For professional advice and assistance with probate avoidance or other estate planning help, contact the Campbell Law Offices to meet with one of our experienced probate lawyers.