Probate is no picnic to those who are unfamiliar with the process. For one, if you’ve been chosen as a personal representative for an estate, you’ll need a complete understanding of what a personal representative has to do with both probate and non-probate assets. And, unfortunately, California probate law doesn’t make things easier.

Specific rules apply to different types of assets involved in a California probate. For example, some assets are subject to probate (probate assets), while others aren’t (non-probate assets). You may be wondering what this is. If so, you’ve come to the right place.

In this article, we’ll break down the nuances of non-probate assets according to California law. You will have more clarity on what assets can be subject to probate, why this matters, and how this affects planning an estate.

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“I am writing to give A People’s Choice my utmost recommendation. I live in New England and found them on the web. After speaking with a staff member on the phone I had the confidence to give them my business. A People’s Choice handled my probate case with great professionalism and knowledge. My case turned out to be more complicated than originally believed and the staff walked me through each step. They always responded promptly to my email questions. In the end, their service was exactly what I hoped for; they saved me thousands of dollars and allowed me to do it from across the country. They were truly a pleasure to work with.”

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What Are Non-Probate Assets?

If you’re new to probate and the assets that are subject to it, an overview of probate and non-probate assets can provide you with a better understanding of how California law functions.

In California, any form of property that is not individually owned by the deceased is considered a non-probate property by operation of California probate law. These assets are common. They can be anything from cars, belongings, life insurance policies, real property, and transfers on death accounts.

The great thing about non-probate assets is that they entirely avoid the probate process. They are transferred almost immediately to the designated individual upon the decedent’s death. Let’s take a closer look at some of the most common types of non-probate assets.

Real estate: Real estate is generally a non-probate asset because it can be in joint ownership with the right of survivorship, such as a spouse. This means that the decedent passes their right of ownership to the other surviving owners or a relative upon death (entirely isolated from the probate process).

Financial accounts or life insurance policies: Another class of non-probate assets would be financial accounts or life insurance policies that have a designated beneficiary. This is important in estates where a person adds a “pay on death” beneficiary designation or section to exclude the asset from the probate process.

Living trust: In this form of estate planning, an individual transfers the sole ownership and titles the property in the trust’s name. The designated person can make use of the asset and its benefits but has no ownership of the trust asset’s legal title. This ownership is never transferred, neither upon death nor in the individual’s lifetime.

What Are Probate Assets?

Upon death, a deceased person can leave many types of assets behind that do not meet the requirements to skip probate. These assets must go through the probate process and can take months and months to distribute. Assets that are subject to probate include the following:

  • Any personal property or real estate that the deceased person individually owned in his or her name
  • Any type of tangible item like a car, jewelry, furniture, personal belongings, a home, and many more
  • Intangible items such as savings accounts, stocks, business shares, cryptocurrency, and items similar to this.

Do Non-Probate Assets Have to be Probated?

This is a very common question because it seems almost unbelievable that the whole tedious probate process can be circumvented, but truly, the simple answer here is no. Non-probate assets don’t have to be subject to the probate process upon a decedent’s death. These assets are intended to directly transfer to the designated heirs or beneficiaries that have been listed by the decedent through alternative means to probate.

By owning non-probate assets, you have access to one of the easiest methods to avoid the probate process entirely. The probate process can be expensive and take up a lot of time, so your heirs and beneficiaries will no doubt appreciate this. Non-probate assets are normally made available to designated beneficiaries within a brief time after the death of the decedent and the receipt of a valid death certificate.

The Real-World Difference Between Probate and Non-Probate Assets

Knowing what assets are subject to probate and which are not is extremely important when developing your estate plan. This is mainly because probate and non-probate assets go through a completely separate legal process upon an individual’s death. While avoiding the probate process (a costly and time-consuming process) can seem to be a good decision on the surface, there is no exact guarantee that the intended individuals will inherit what you want them to receive.

Example 1: Bank Account

For instance, let’s say you wish for your children to receive an equal share from your estate upon death. You, therefore, procure a will that states this. If one of your main assets is an individually owned savings account with $30,000, then that money would be equally transferred to your children according to your will.

Now instead, let’s say you listed one of your children as a joint owner on this savings account to assist with paying bills. This decision now changes the savings account from a probate asset to a non-probate asset. This means the money will not be transferred according to your will and the assets will not be divided the way you’d hoped.

Example 2: Real Estate

Another example of this would be real estate. Let’s say you have two children and one of them lives nearby, while the other one lives in another country. Your local child helps you with your home maintenance, estate taxes, etc., and is therefore listed as a co-owner of your home. You may intend for the profits from the sale of the home to be evenly shared upon death, but due to the one-child having joint ownership, the house would only transfer to that one child upon your death.

Your child who co-owns your home is under no legal ruling or obligation to share these funds with their sibling. Now, if that child gets married and then divorces or has a judgment made against them, then the separated spouse could also try to claim the real estate property based on California intestacy laws. This is why it is very important to know who specifically will have ownership of your non-probate assets upon death.

A helpful piece of advice is to think carefully about the legal repercussions of including additional owners in existing bank accounts or real estate contracts. It would be in your best interest to consult a professional for advice when planning your estate so that you can build a plan that best suits your intentions.

Ultimately, Are Probate or Non-Probate Assets Better for Estate Planning?

Probate v. Non-Probate: What Is the Difference?

Both probate and non-probate assets can work well for an estate, but it’s important to have a good idea of which is which. If you’re planning your estate, the best course of action to take is to have certain assets listed for probate. This will help minimize the scenarios of intestate succession. For instance, to avoid any sort of miscommunication or transfer issues, it may be wise to have individually owned property in your name be subject to probate and listed on your will. Any assets that don’t necessarily need to be probated can be chosen at your discretion.

Assets that are joint-owned, in a living trust, or have a beneficiary named upon death are another matter. These assets don’t need to be listed in your will at all. Upon death, they will be transferred according to the policies set in place, ensuring that the correct people inherit the assets based on the estate administration guidelines.

If you have the correct alternatives in place to avoid the probate court process, the transfers can be done quickly and painlessly. There is no need to have any non-probate assets listed in your will. However, be aware that your will does not have any control over the distribution of non-probate assets (see the example in the section above about the joint bank account).

How to Learn More about Probate and Non-Probate Assets

Do you need more detailed information? There are many sources that can provide help with a deeper dive into probate and non-probate assets in California. You can make use of online sources such as the California court’s self-help section, self-help books, or the guidance of a professional such as a legal document assistant service. These resources will be able to help you identify which of your assets should be subject to probate and listed in a will.

Will I Need a Probate Lawyer?

In most cases, a personal representative can settle the probate of an estate by themselves. There are many instances where executors may decide to use the services of a probate lawyer during the process of settling an estate, especially if the estate is relatively complex. Likewise, if you’re planning an estate, you may wish to consult a lawyer (such an individual will provide complete advice on estate planning).

However, if you are responsible for an estate that’s relatively simple and small, then you may be able to conduct estate planning or probate without the help of a lawyer. If need be, you can make use of a legal document assistant service instead. It is much cheaper than using a probate lawyer and can prepare all the necessary documents you need for a successful and smooth estate planning or probate process.

Get Professional Help

If you are having trouble getting started with probate or estate planning, then consider A People’s Choice. We are a legal document assistant service that ensures you will be well informed and prepared, and we have a flat rate that is substantially cheaper than that of an attorney.

By going with us, you are guaranteed optimal service and excellent guidance for settling an estate. Contact A People’s Choice today!