WHEN a person passes away, the decedent’s assets could be divided in several ways: intestate succession (decedent left behind no will), testate succession (the decedent left a will), or through a trust instrument. Certain assets, such as bank accounts or qualified assets, could also be transferred through the use of beneficiary designations.
Probate Court
When a person dies still owning property in their individual name, an order from a Probate Court is required in order to transfer the assets from the decedent’s name to the names of the decedent’s heirs. The decedent’s heirs will need to file a petition to open a probate estate in a probate court where the decedent was last domiciled. Additionally, if the decedent owned real property in a different state the heirs will need to open a probate estate in each state where such real property is located. The laws of each individual state will govern the distribution of assets.
Probate court serves two main purposes. The main purpose, as mentioned above, facilitates transferring any assets owned by the decedent to the decedent’s heirs. For example, if the decedent owned a house, the decedent will not be able to sign the deed transferring the house to their heirs. Therefore, the Probate Court will authorize a fiduciary to sign the deed. The second purpose is the opportunity for creditors of the decedent to step forward and make a claim for the estate. Each state gives the creditors a certain time period from when the estate was opened to make a claim. This is commonly referred to as the “Creditor Claim Period.” After the Creditor Claim Period, the estate can be closed and creditors are generally barred from bringing further claims.
II. What a Will Can and Cannot Do
The ultimate goals must be discussed when determining whether a person requires a will or a trust. Although a Trust is the preferred method and can avoid probate, it is not the best for every person.
A Will can be used to:
– Pass the decedent’s assets according to the decedent’s wish. However, as detailed above, the assets will need to be transferred according to the probate process.
– A Will is cost effective to draft compared to a Trust. Generally, a Will requires less labor for an attorney to draft. Additionally, a Trust requires further work for the attorney and the client to ensure the Trust owns all the client’s assets. While the Will is cost effective to create, the costs associated with probating the estate can be up to five percent of the value of the estate.
– The Testator can name preferred guardianship of minor children. The Court will strongly consider the persons named in the Testator’s will when determining guardianship of minor children. However, this is generally not an automatic. The Court will still consider what is in the best interest of the child.
– A Will can be used to create a testamentary trust. This is a Trust created by the death of the Testator. Unlike trusts created during the life of the decedent, a testamentary trust can be cumbersome to manage because the Probate Court will be involved in the administration of the trust.
– A Will can be used to avoid a bond for the persons administering the estate. Probate Courts will require the personal representative or executor to post a bond in order to protect the property of the estate. In the Will, the Testator can request the court to waive the bond requirement or to require the lowest bond amount required under the laws of where the Probate Court is located.
A will cannot be used to:
– Avoid probate. The Will states to whom the Testators assets are to be distributed, but the assets must still go through the probate process first.
– Maintain privacy. Probate court, like any court, is a matter of public record.
– Avoid estate taxes.
As stated, the preference is to create a trust. It can avoid so many problems that occur once someone passes. Schedule an appointment to see us so that we can effectively map out an estate plan that can avoid probate and the costs of hiring an attorney if probate is needed.
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Ethelene F. Salas, Esq. is a practicing family law attorney. Ms. Salas is a Pilipino-American born in the Philippines, raised in the United States, and speaks Tagalog fluently. She completed all her studies in the United States including a Bachelor of Arts Degree in Economics in 1989 from University of California, Los Angeles (UCLA) and a Juris Doctorate in 1992 from the University of California, Los Angeles, (UCLA) School of Law. The Law Offices of Ethelene F. Salas is located at—the main office at 100 N. Barranca St., Suite 700, West Covina, CA 91791. We also have branch locations in Torrance/Gardena, Cerritos, Riverside, Orange, and Ontario. To schedule an appointment with her, please call (626) 858-4646 or email us at [email protected]
