February 3, 2012
Californians have found some estate relief. The State has increased its small estate limits to $150,000 on total property, with real estate being limited to $50,000.
Prior to January 1, 2012, if a person died with assets valued in excess of $100,000 or real estate in excess of $20,000, held in their name their estate was required to file a formal probate. For those of you who have not experienced the joys of California’s formal probate system, it a public process that often takes 8-12 months to complete and is expensive.
Estates with less than the stated limits, you can use a small estate procedure to avoid a formal probate. The small estate procedure is quick and inexpensive. The limits are frequently a problem for people with trusts who, for whatever reason, failed to place some assets in the name of the trust. Their estates would often be forced into both a probate and then a trust administration.
One of the most often overlooked assets is the Certificate of Deposit (“CD”). Because CDs are set up for a period of time, people do not want to pay a penalty for early withdrawal; they often delay changing the title on the CD when they set up their trust. Time passes the CD rolls over to a new time period and it’s easy to forget to place the ownership into the trust. Many times the CD is at its maximum amount of $100,000 and with even one month’s interest it exceeds the small estate limits. This results in the requirement for a formal probate, creating delays in the closure of the trust, additional costs and frustration.
While Californians now have this modest increase available to them, you wouldn’t want to rely on this small estate relief for planning your estate. It is helpful to fix oversights in funding your trust but you will still want an experienced estate planning attorney to guide in creating your legacy.
Michael E. Garner, Esq.