Probate court proceedings are normally required to transfer the assets of someone who has passed away. These proceedings can be complicated, contentious and expensive. Knowing this, many people take steps to save their families from this stress and aggravation. With a little advance planning, there are numerous ways to avoid this horrendous probate process.
You can create and enter into a living trust which will sidestep and avoid the necessity of going through probate for almost every asset owned. That includes vehicles, bank accounts, stocks, real estate, etc. You will need to draft trust documents (similar to a will) naming a person to act as trustee after your death. With those documents in place, you must transfer ownership of all your property into the trust. While you are alive, you act as the trustee and have all the powers over your property as normal. In fact, you can simply revoke the trust if you no longer wish to hold your assets in this method. Or, you can simply amend the trust documents as necessary to change your desired outcome for your assets. On your passing, the named successor trustee will be able to transfer all the property trust beneficiaries without probate court proceedings.
For property you own jointly with another person, you can elect to hold that property with a “right of survivorship.” In this situation, surviving owner automatically owns the property when you pass. With a bit of paperwork indicating the change in title, the surviving owner can completely avoid probate for the asset in their name.
California has the following types of joint ownership:
- Joint tenancy. Property owned in joint tenancy automatically passes to the surviving owners when one owner dies. Probate is avoided. This form of ownership can work well when couples (regardless of married) acquire vehicles, bank accounts, stocks or real estate together.
- Community property with right of survivorship. California is a community property state. This means that spouses and registered domestic partners own all property acquired during the marriage jointly unless steps are taken to keep it separate. Spouses or partners that hold title to an asset as community property with the right of survivorship will automatically receive full ownership of the property when one spouse or partner dies without the need for probate.
Payable-on-Death Designations for Bank Accounts
You can add a “payable-on-death” (POD) designation to bank accounts such as savings accounts or certificates of deposit in order to avoid probate. You will remain in control over all the money in the account and your POD beneficiary has no rights to the money until you pass.
Transfer-on-Death Registration for Securities
Stocks and bonds can be registered with a transfer-on-death (TOD) form. You will name a beneficiary on the account and they will inherit the account automatically at your death without the need for probate.
Transfer on Death Deeds for Real Estate
Pursuant to Cal. Probate Code § 5620, you may provide for a transfer of real estate upon death through a “transfer on death deed.” These deeds are sometimes called beneficiary deeds. You would execute and record the transfer deed now, but the transfer would not be effective until your death (and it would not need to go through probate). Just as with a living trust, you can revoke this decision or even sell the property at any time because the named beneficiary has no rights until your death.
Transfer-on-Death Registration for Vehicles
Similar to the real estate transfer on death above, you may also do a transfer-on-death registration of vehicles. With this type of vehicle registration, your beneficiary will automatically inherit the vehicle after your death without probate.
For more on Orange County Probate, Trusts and Estates, please see our resources here.