Non-Probate Transfers in Los Angeles
What Are Non-Probate Transfers?
A non-Probate transfer of property belonging to a decedent generally occurs by operation of law, or by contract.
Here are a few examples of non-Probate transfer methods in California:
- Trusts. One of the most well-known ways to avoid Probate is by placing your assets into a living Trust during your life. Such Trusts are known as “inter vivos” Trusts. Trust Administration is much less expensive and much more efficient than Probate, it is a private process (rather than becoming publicized through the court system), and it affords “parenting from the grave” by designing the distribution of assets in a particular way, as well as the timing of distributions. Trusts also offer a number of asset protection provisions for their Beneficiaries to safeguard the inheritance and protect your beneficiaries from themselves (in the event of substance abuse dependence, special needs or incapacity), and from their creditors.
- Right of survivorship. Joint tenancy is one example of ownership that passes by right of survivorship. For example, real estate owned in Joint Tenancy passes to the surviving joint tenants by right of survivorship, outside of Probate, and outside of a Will or a Trust (it passes by operation of law). In California, community property (property acquired during marriage) is also subject to right of survivorship. Therefore, a surviving spouse will be able to take ownership of community property without formal Probate. However, on the surviving spouse’s death (unless placed in Trust), such property would trigger Probate.
- Life Insurance Policies. Life Insurance policies are contracts whereby on the death of the insured; a death benefit is paid to a named Beneficiary. Such assets do not go through Probate, so long as the named Beneficiary survives the insured. It is notable that minors (persons under age eighteen) cannot gain access to a life insurance death benefit until they turn eighteen. In that case, a legal Guardianship of the Estate of the Minor must be set up, in order to access a death benefit left to a minor.
- Payable-on-death (“POD”) and transfer-on-death (“TOD”) designations on Bank or Retirement Accounts. One is generally able to designate a “pay on death Beneficiary” on his or her bank accounts or retirement accounts. Upon death, the funds in the account can be collected directly by the designated Beneficiary without Probate, provided that the Beneficiary survives, and that the Beneficiary is over age eighteen. Note that such beneficial interest becomes vested at the time of death, and any creditors of such named Beneficiary will be able to attach such inherited assets. This can be avoided if instead of naming Beneficiaries on your accounts, the accounts were owned by a living Trust with creditor protection provisions safeguarding your Beneficiaries’ inheritance from their creditors, divorce, or other special circumstances that may jeopardize such inheritance.
This is not a comprehensive list of the ways an asset can be transferred outside of Probate. When you retain the Law Offices of Maria N. Jonsson, PC to represent you with your Estate planning or post death administration legal matter, we can help you identify and implement effective and efficient legal strategies.
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