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Probate, qualifying assets and the new small estate law

Laws seem to change almost daily and in the world of estate planning, the rules concerning a decedent’s assets and probate are no exception.

As of January 2020, California law allows assets that fall under the new “small estate” guidelines to avoid the probate process.

Subject to probate

Probate is the process of settling an estate according to the will of the deceased. The estate consists of all the assets in which he or she held an interest at the time of death. The assets held in the name of the decedent usually have to pass through probate. These include:

  • Cash and cash accounts
  • Real estate
  • Personal property, including items of value, such as vehicles
  • Assets held as tenants in common
  • Assets that allow for beneficiaries but remain unnamed

Not normally subject to probate

  • Trusts
  • Insurance policy proceeds
  • Accounts with named beneficiaries, such as a 401(k), IRA or investment accounts with TOD, or transfer on death, designations
  • Assets having joint ownership with right of survivorship

About the new small estate law

An estate includes both personal and real property. Formerly, California law held that identity as a small estate required that the combined amount of a decedent’s assets could not exceed $150,000. Effective January 1, 2020, that new threshold became $166,250.

How to proceed

Under Section 13100 of the California probate code, anyone who has the right to receive property from the small estate of a decedent can complete an affidavit requesting transfer. Special rules apply when real property is included in the estate. Creditors can also complete these forms to request payment or transference of property owed to them. Keep in mind that certain restrictions apply when a decedent’s assets qualify for small estate status. For example, a minimum of 40 days must pass following the death before filing an affidavit. With each new law, such as the small estate statute, there are new rules to follow and it is worthwhile to learn all you can before proceeding.