Thanks to a new law that just took effect this April, more California estate assets can be excluded from probate even if they aren’t placed in a revocable living trust or other steps aren’t taken to avoid the sometimes lengthy and costly process. In California, probate can easily take 12 to 18 months to complete and for beneficiaries to receive their inheritances.
Prior to the new law, an estate could bypass probate as a “small estate” if all “probate assets” totaled no more than $184,500. Probate assets are those owned solely by the deceased with no designated beneficiary listed.
Recognizing the cost of home in California
The new law raises this threshold to a little over $200,000. Perhaps more importantly, it allows estates that include a home valued at up to $750,000 to be considered “small” as long as other probate assets are under that approximately $200,000 threshold.
This change in the law reflects the increasing real estate prices in the state. The average cost of a home in California is currently about $750,000.
The threshold applies only to homes that were the deceased’s primary residence. It doesn’t include vacation or rental properties. The law does note, however, that the home doesn’t need to be “the decedent’s residence at the time of their death.” For example, they have been living in a nursing home or assisted living facility and still owned their home.
A revocable living trust can still be the best option for avoiding probate
It’s important for Californians to whom this may apply be aware of the new law, which will allow inheritances to be distributed with comparatively little paperwork. However, typically the most effective way to save beneficiaries from having to deal with probate is to place high-value, titled assets like real estate in a revocable living trust. This allows them to transition smoothly to the designated beneficiaries.
Each person’s circumstances are highly unique. That’s why it’s always best to get individualized estate planning guidance to protect your legacy and make things a little easier on your loved ones after you’re gone.