Hi, I’m Greg with the Ashcraft Firm. I’m an estate planning attorney and over the next four weeks I’m going to be talking to you about how to pass property at time of death.
The Four Ways to Pass Property at Death
Really there are four basic ways to pass property at death,
First, this week we will be talking about passing property through your estate.
In the following weeks will be talking about passing property by contract,
by joint tenancy,
and through a trust.
Definition of Passing Property Through Your Estate
So, what does it mean when we say we are passing property through the estate or by the estate? What it really means is probate. If you are not passing property through any of the other ways that we will be talking about in the next weeks, then you are going to be passing property through your estate and it will go through probate.
In California if it is under 150K (your gross estate) then it doesn’t have to go through the full formal probate. But if you own a piece of real property at least here in Southern California,, you are going to be going through the full formal probate. because we are taking about gross estate, so they pretend like you don’t have any debts. ‘when we are talking about passing your property through your estate, it means that you haven’t passing it by contract, by joint tenancy, or through a trust.
NOTE: Even if you create a will, your property still has to go through probate. That will is essentially a letter to the probate judge.
Let me give you a simple definition of probate: Probate is the court process that returns property back to the land of the living.
A lot of people think that probate is actually a tax. It’s not a tax. It is a costly court procedure that returns property back to the land of the living. A lot of people hear that probate is a bad tax. It is bad, but it is not a tax.
Pros of Passing Property Through Your Estate
One of the pros of the probate process is that it is really easy to set up. If you do nothing, your property is going to go through the probate process.
Another pro is that you have court oversight., if you want the court to oversee your property’s distribution, then it might bee the right thing to pass your property through your estate.
Cons of Passing Property Through Your Estate
Most people find that it is not the right way because there are a lot of downsides to allowing the court to oversee the distribution of your property.
The first con is that it is time consuming. It takes between nine and twelve months to pass property through a full formal probate.
Also you lose control. Who’s ultimately in control of that probate process? The judge.
Third, you lose privacy. A lot of people think I’m not famous, who cares what’s in my estate. If you have ever been through a probate and there was a piece of real property, you are going to get hundreds of phone calls from realtors trying to sell your land. They will call you up and say “I’m sorry for your loss, but I’d like to sell the piece of property you just inherited. There are a lot of hassles associated with having all of your financial affairs open to the public. If there is someone out there that wants to take advantage of someone, they can go online to find out what assets people are getting because it is part of the public record. So even if you don’t think that anyone cares about your information because you are not famous, there are still lots of concerns to have about having all of your financial information public to everyone.
Number four, it is costly. If this were a yelp ad there would be four dollar signs. There is a way to calculate the costs associated with probate. Im not going to go over that with you today. But again, they pretend like you don’t have any debts when they are calculating the costs because they are looking at your gross estate for the calculation of fees, so the costs get pretty exorbitant pretty fast.
Those are some of the big down sides of letting your property pass through your estate, but it easy to set up and there is court oversight. so if you need that the court is there.
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Nothing said in this post should be misconstrued as legal advise. The information is situational. You should seek legal counsel as to whether the strategies and consequences apply in your situation. Also, the very basic information given here is based on California law and may not apply in other states.