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2 ways to keep real property out of California probate court

On Behalf of | Sep 27, 2022 | Estate Planning

When someone dies in California, their personal property becomes their estate. Even if they tell their loved ones ahead of time who should get what, the recipients will likely need to wait. Those assets will end up going through probate court.

Creditors will be able to make a claim against those assets, and beneficiaries may have to wait months, if not more than a year, before they receive their inheritance. In some cases, claims by outside parties may ultimately mean that beneficiaries don’t receive as much as they expected or as much as the deceased intended.

Keeping property out of the probate process is one means of shielding it from creditor claims. What are ways to transfer real estate without it going through probate?

Consider a transfer on death deed

It is possible for you to create a special deed that will automatically transfer ownership of your home to your child or another beneficiary after your death. They will only need to present the transfer on death deed and your death certificate to become the new owner of record.

Of course, there are a few challenges to this approach, not the least of which is the possibility of a new property assessment and substantially higher tax obligations following the transfer of ownership.

Move the property into a trust

Another way to transfer ownership without the property going through probate court and becoming vulnerable to creditor claims is to move the property into a trust. Trusts are particularly beneficial because they allow you to designate someone as an occupant without necessarily giving them the right to refinance or sell the property.

You can protect someone’s possession or tenancy while still passing the value represented in the home to someone else after their death, relocation or remarriage. A trust has the added potential to protect your home from creditor claims while you are still alive.

Especially for those who worry that they may require Medicaid late in life or whose estates are quite close to triggering federal estate taxes, Advance planning to keep their real property out of probate court may be a very smart move. Understanding common estate planning tactics for asset preservation and probate avoidance can help you achieve your estate planning goals.