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  • TRANSFERRING ESTATES OF SMALLER VALUE IN CALIFORNIA

    This week’s question:
    My parents who live in California have a very modest estate and they do not want to spend a lot of money with an estate planning lawyer or Probate Court later on. Do you have any ideas what they can do in their situation?
    /s/Jack J.
    Almaden Valley
    Dear Jack—
    I can understand their dilemma, Jack. Sometimes it is a fine line to walk between doing what is right and being able to afford it. Let me offer a few ideas for you and the family.
    First of all, you might have them visit with a lawyer after all about a living trust, just for ideas. This is often the best way to go. You and they might find that it would work from a financial point of view.
    If that is out of the question, there are a few provisions in California law that may help them. By the way, most states have different laws, so these comments pertain to California law only. (And I am not licensed to practice law in any other state.)
    Some of these procedures are called “summary procedures” and are not always available. If they work, they can serve as an expeditious transfer of a decedent’s assets without formal probate proceedings. They are elective in nature and work best when the estate is small, when there are no adverse tax consequences, the number of successor beneficiaries is small, where the decedent had few debts or liabilities and where there is no fighting.
    The California Probate Code has a few helpful provisions for smaller estates and how to pass on the asset to the successor person without a formal probate court process.
    If the total gross value of the decedent’s real and personal property is less than $150,000, the personal property can be transferred by affidavit. Also, a petition may be used in that situation to transfer real property or real and personal property. That procedure is sometimes called a “small estate affidavit”.
    Regardless of the total value of the estate, if the value of all of the decedent’s real property in California does not exceed $50,000, an affidavit to transfer the real property can be filed with the probate court.
    Also, there is a set-aside procedure to the surviving spouse or registered domestic partner or minor children for estates not exceeding a net value of $20,000.
    One needs to keep in mind that several types of property are excluded from the value limits mentioned above. For example, joint tenancy property automatically passes to the surviving joint tenant, and a life estate passes to the beneficiary. Also, property in a pay-on-death account automatically passes to the person designated to receive the money, and life insurance and retirement benefits automatically pass to the beneficiary named in the documents.
    I need to note also that the mere size of the estate is not the only factor to consider. Sometimes a probate court proceeding is needed to protect beneficiaries from creditors of the decedent or if there are disputes among the beneficiaries, family members, or others. Tax benefits also need to be considered.
    These procedures can be used by the sole beneficiary or all of the beneficiaries who succeed to a particular item.
    Attorney’s fees for summary procedures are set by private agreement of the attorney and client involved, and are not set by law, such as the California Probate Code. If the fees will exceed $1,000, the agreement needs to be in writing.
    So, you can see, Jack, that there may be other options available to your parents. I would encourage them to see their own attorney about this whole topic in view of its importance. Ask them to bring a list of their assets and liabilities to that meeting, a list of their intended beneficiaries, and a list of questions so they can be addressed. Copies of account statements are also very important, so the attorney can see just how the assets are owned at the present time.

    /s/Donald J. DeVries
    Almaden Valley

    You can reach Mr. DeVries with your questions by email at don@almadenvalleylawyers.com, with “Almaden Times” in the subject line, fax at (408)268-6502, telephone at (408)268-9500, or mail at DeVries Law Office at 6475 Camden Avenue, Suite 200, San Jose, CA 95120. Your name will not be used. No attorney-client relationship is created by these articles

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