In 2012, the law in the state of California changed regarding small estates. Currently, California Probate Code §13100-§13116, the Small Estates Law, says that if the value of the decedent’s estate at the time of death is less than $150,000.00, the estate does not have to go through probate. An affidavit is signed which is then used to distribute the estate to the rightful heirs. The affidavit has to be signed at least 40 days after the death of the decedent. If the estate is administered under the typical probate provisions, there are no documents needed for filing with the Superior Court.
The $150,000.00 limit on the value of the estate includes the following assets: Brokerage accounts, mutual funds, bank accounts, stocks, bonds, and real property not to exceed a value of $50,000. Other assets similar to the ones previously listed are also included in the $150,000.00 fair market value of the estate. The assets have to be owned by the decedent and titled in his or her name. However, the following assets are NOT included in the determination of the estate’s value:
- Property (real or personal) held in joint tenancy.
- Assets that are held in trust.
- Pension accounts, including IRAs and 401(k)s.
- Life insurance benefits.
- Death benefits.
- Vehicles registered in the decedent’s name.
- Pay from military service.
- Up to $15,000.00 in salary not paid prior to the decedent.
- Pay on death (POD) accounts.
- Accounts that name a third party beneficiary.
The value of the estate is determined as of the date of the decedent’s death. The day that the affidavit is signed is irrelevant.
The small estates law only kicks in after the affidavit has been signed. The affidavit cannot be signed before a 40-day time period has elapsed since the decedent’s death. All affidavits signed after January 1, 2012 trigger the $150,000.00 limit for the small estates law. The key here is the day that the affidavit was signed, and not the date that the decedent died.
One question that many people have regarding the California small estates law is: “How are the estate’s assets collected?” The required affidavit has to include all of the information in California Probate Code § 13101. After the affidavit is signed, it is given to the person or financial institution that is holding the estate’s assets. The assets are then transferred into the custody of the one who signed the affidavit. After the creditors are paid, the remainder of the estate is distributed to the heirs.
Deciding whether to go the Small Estates route or whether to endure probate can be a difficult decision and one that should be made by consulting someone with knowledge of the subject. California estate-planning attorney John Palley at Meissner, Joseph & Palley, Inc., is a Certified Specialist in Estate Planning, Trust, and Probate Law. His office will be happy to assist you with any of your estate planning needs. Call today at 1-888-920-5983.