How a new California law helps more estates avoid probate

The total value, or size, of a person’s estate can make all the difference in how complicated it is to administer after they’ve died. Part of the reason for this is that it can affect whether it has to go through the formal probate process. 

People often use estate planning strategies like placing valuable assets, such as homes, in a revocable living trust to minimize or avoid probate. Some people choose to strategically gift assets to loved ones while they’re still around to lessen the value of their estate. Others may add loved ones as co-owners or direct beneficiaries.

This past year, a new California law took effect that helps even more people avoid probate. It changes what’s considered a “small estate” that can avoid probate. 

Previously, a small estate was one that had $184,500 in “probate assets.” Of course, that left nearly all California homeowners out since the average cost of a home in our state is approximately $750,000. Probate assets are those owned solely by the deceased without any direct beneficiary that are required to go through probate.

More about the new law

Under the new law, if a person’s primary home is worth up to $750,000, their estate can still qualify as “small” as long as their other probate assets don’t exceed the new threshold, which is now just above $200,000. This doesn’t apply to rental or vacation properties. However, a person doesn’t have to be living in their primary home when they die. They might be living in a care facility, for example, and have not yet sold their home.

Whether you’re putting your estate plan in place in the new year or you already have one, it’s important to keep up with changes in the law. Many of those changes – particularly here in California – are intended to make estate administration easier for surviving loved ones. 

Eliminating the need for a long, complicated probate process is certainly one of the key goals for people who establish an estate plan. Thorough estate planning can also help keep the estate’s assets in the hands of the intended heirs and other beneficiaries and not spent on avoidable taxes and fees. Working with an experienced estate planning professional can help.