Sunday, November 22, 2009

What is Probate-the basics.

Probate is the Court-administered process which facilitates the transfer of assets of deceased (someone who died) to his or her beneficiaries/next of kin. In California, if the assets owned by deceased are $100,000 or above. The assets subject to probate are those which are not subject to right of survivorship or transferable upon death. A typical example of assets transferable under right of survivorship is real estate owned as community property or joint tenants. An example of property transferable upon death is Payable on Death bank accounts.

So, if someone dies with a property owned as joint tenant and a POD bank account, there will be no probate. This avoids probate but there are other estate tax and income tax related consequences which render these methods expensive later on (higher tax consequences).

Purpose of the probate is for the court to take an inventory of all the assets owned by the deceased, make sure that all creditors are paid, handle any and all challenges to will (if any), and then transfer the balance to the persons named in the Will or if there is no will, to transfer the property to lawful heirs under Probate Code.

So, in reality, if someone has a Will and has assets over $100,000 in assets, the estate will go through probate.

Similarly, if someone dies without a Will, and has assets over $100,000 in assets, the estate will go through probate.