A fairly noteworthy change was brought to the estate planning landscape this year- the “small estate,” which since January 1, 1997, has been defined as an estate of $100,000 or less, has been redefined as an estate of $150,000 or less. Effective on January 1, 2012, Bill AB 1305, introduced by Assemblywoman Huber, amended certain provisions of the California Probate Code to allow a simplified administration of all estates with real and personal property having a gross value less than $150,000. The bill also authorizes real property with a gross value less than $50,000 to be transferred by an affidavit procedure, which was raised up from the previous level of $20,000, and authorizes a surviving spouse to collect unpaid salary or other compensation of $15,000, which was raised up from the previous level of $5,000. In a nutshell, California law allows for two different forms of simplified, “small estate” administration. The first is the “affidavit procedure,” which is just what it sounds like – an affidavit, signed under penalty of perjury, signed by the person entitled to succeed to the property, authorizing the property to be released to them. If the gross value of all real and personal property in an estate is less than $150,000, then this procedure may be used to collect money due the decedent (bank accounts, certificates of deposit, etc.), tangible personal property of the decedent, and any other debt, obligation, interest, right or security of the decedent. If the gross value of all real and personal property of an estate is less than $150,000, an affidavit can also be used to transfer real property with a gross value of $50,000 or less. Finally, the affidavit can be used by a surviving spouse to collect a deceased spouse’s unpaid salary or other compensation of up to $15,000. The other form of small estate administration is the Petition to Determine Succession to Property. This is applicable when there is real property in an estate exceeding $50,000. It allows a person to petition the court for an order distributing the property to the person or persons entitled to it without having to go through a full probate proceeding. It is a petition to the court which is set for hearing and requires proper notice and therefore may take a few months to complete, but it is much simpler and much less expensive than a full probate administration. If you own any real estate in San Diego County it may seem that this provision holds no bearing for you. The gross value of your home alone is probably enough to force your estate into a full probate proceeding.However, not all property will be considered a part of your estate at your death.The following types of property are not included in your estate:
- All property held in joint tenancy or as community property at your death;
- All assets held in a revocable living trust;
- All “multi-party” accounts, primarily referring to accounts that the decedent owned but are payable to a third party on the decedent’s death;
- Vehicles and boats registered with the DMV;
- Manufactured homes, mobile homes, commercial coaches, truck campers and floating homes registered with the DMV or HCD, as appropriate. However, if you own the land and/or the property is affixed to the land, usually indicated by an assessor’s parcel number and property taxes payable the county, then this is real property and is a part of our estate. Remember that probate avoidance is a central estate planning goal for most people. I would encourage you to look at your estate and categorize your property to see where you stand.
Remember that if joint tenancy or community property assets end up transferring to you on the death of the other joint tenant or spouse, then that asset will be owned entirely by you and will be considered a part of your estate at your death. If you have a trust in place, make sure that the title to the asset reflects the trust as the owner. The goal is to have the assets that included in your estate be $150,000 or less. If your estate is still greater than $150,000, or if you are unsure and would like to discuss it with someone, I would encourage you to make an appointment to sit down with us as soon as possible to see what options are available for you.