How to Handle a Small Estate in California
If you're wrapping up the estate of a California resident who died with an estate that's worth less than a certain dollar amount, you won't have to go through a formal probate court proceeding.
It doesn't matter whether or not the deceased person left a will; what matters is the value of the assets left behind. If the estate's value is under the "small estates" limit in California, you can take advantage of a simplified probate procedure, often called a "summary probate." Instead of having a court hearing in front of a judge, you may need only to file a simple form or two and wait for a certain amount of time before distributing the assets.
In some states, it can be even easier: Inheritors can use a simple affidavit to claim assets. (An affidavit is a statement you sign in front of a notary, swearing something is true.) If you live in one of those states, you just have to wait a required period of time, then sign a simple, sworn statement that no probate proceeding is happening in your state and that you are the person entitled to inherit a particular asset--a bank account, for example.
When you are trying to determine whether or not an estate's value is below the California small estates limit, the first thing to do is make a list of the assets. A simple spreadsheet or list will do. Not everything a person owns counts, though. For this list, include only the things that pass to heirs and beneficiaries by will or, if there's no will, by California intestacy laws, which determine who inherits if there is no will.
Don't count assets that are held in joint tenancy, retirement plans, payable-on-death (POD) bank accounts, real estate transferred by a transfer-on-death deed, or transfer-on-death brokerage accounts. These assets don't count towards the small estate limit because they pass to the named beneficiaries regardless of what a will (or state intestacy law) says. If a person had a life insurance policy with a named beneficiary, the insurance proceeds won't count either.
Some states also don't count the amount of money owed on a car, or a house, while others count the fair market value of an asset, even it is subject to a loan or a mortgage.
For example, say Donald died in California and owned the following assets:
- A checking account with $2,345
- A savings account with $2,567
- A car with a blue book value of $6,500 (and no loan)
- An IRA with $32,000, naming his son and daughter as beneficiaries
- A life insurance policy worth $15,000, naming his son and daughter as beneficiaries
To figure out whether Donald is above or below California's small estate limit, only the bank accounts and car would be counted, for a total of $11,412. His IRA and the life insurance proceeds aren't counted towards the limit because they will go to his beneficiaries directly. The value of the car is included because he doesn't owe money on it.
That means the value of Donald's estate is under the California small estates limit. His son and daughter, who inherit his assets under California's intestacy laws because Donald had no will, would follow this procedure:
In California, there is an Affidavit procedure available as long as the personal property does not exceed $150,000. There's a 40-day waiting period. Cal. Prob. Code 13050.
There's also an Affidavit procedure that you can use if you have real property worth less than $50,000 (of which there is not much in the Golden State); there's a six month waiting period for this. Cal. Prob. Code 13200 and following.
You can also use an Affiavit to collect up to $15,000 of salary and other compensation (including unused vacation time) owed to the deceased spouse. Cal. Prob. Code 13600.
There's also a summary probate procedure that's available for estates worth less than $150,000. This dollar value doesn't count real property outside of California, property that passes by joint tenancy, property left outright to a surviving spouse, life insurance or other assets that pass by beneficiary designation, and property held in living trusts. Cal. Prob. Code 13150 and following.
You may also be interested in:
Children can't inherit more than a small amount of property directly. Find out how California allows you to handle a minor's inheritance.
Each state has its own rules about probate. Find out how they do it in California.
In order to settle an estate or a trust, you'll need to get a tax identification number for it. Find out how to do it.