Did you know that an estate valued at $400,000 is estimated to cost $22,000 in attorney fees and executor fees in California without proper estate planning? In fact, the cost only goes up from there depending on how much your estate is worth: a $500,000 estate can cost $26,000, while a $1,000,000 estate can cost around $46,000. In addition, this doesn’t include costs, such as filing fees, appraiser fees, and bond premiums. We estimate that the cost could be as much as 5% when this is taken into account.
Many people may think their estate isn’t worth anywhere near that amount, but probate estates in California are determined by the gross asset value. The gross asset value typically counts everything that is owned without any consideration for what may be owed – that means a home or car is taken at it’s worth without taking into account any mortgages, liens, or loans that should realistically reduce the value of that property for the probate estate.
As you can see, probate in California is an expensive and complicated process that determines how solely-owned assets held by a decedent at the time of their death are distributed. However, the process does not have to be expensive or complicated – with proper planning and strategies, probate proceedings in California can be avoided as much as possible. Here are some ways that you can prepare to avoid probate:
Revocable Living Trusts
Most experienced Los Angeles County elder law attorneys will point to a revocable living trust as the best estate planning document to avoid probate proceedings, though it must be stressed that everything depends on the person’s individual situation. A revocable living trust is created and funded by a Grantor and managed by a Trustee. Typically, the Grantor and the Trustee are the same person at the start of the trust. Assets placed in the trust by the Grantor are considered trust property and, for probate court purposes, do not count as probate assets.
Joint-Ownership of Assets and Property
As noted above, probate proceedings only concern solely-owned assets and property, meaning anything that is owned outright by the decedent and no one else. Jointly-owned assets are not impacted by probate – they can pass right to the other joint owner or owners. In the case of real property, real estate deeds must contain specific language that ensures the property passes to the joint-owner in the correct fashion upon the other owner’s death.
If you would like to get more information about strategies to help save your estate money during the California probate process, or if you’d like to have your existing estate plan reviewed to make sure your estate does not have to go through the full probate process here in Los Angeles County, please set up an appointment at our Encino estate planning and probate law office by calling (818) 905-6088.