What assets require probate court approval under a will

I recently spoke with a client, David, who brought me a codicil to his Trust… only to discover it hadn’t been properly witnessed. He’d made the changes years ago, assumed everything was settled, and now faces potentially significant delays and legal fees to correct the issue. This highlights a critical point: even meticulously drafted estate plans are vulnerable if the technicalities aren’t followed precisely. Understanding which assets fall under probate court oversight – and which avoid it – is paramount to ensuring your wishes are carried out efficiently and according to plan.

What Happens to Assets When Someone Dies with a Will?

When someone dies with a valid will, the process of distributing their assets is known as probate. Probate isn’t inherently bad; it’s simply the legal process where the court validates the will, identifies and values the deceased’s property, pays debts and taxes, and then distributes the remaining assets to the beneficiaries named in the will. However, it can be time-consuming, costly, and public record. The goal, naturally, is to minimize the assets subject to this process.

Which Assets Typically Go Through Probate?

Generally, any asset that doesn’t have a designated beneficiary or a valid “transfer on death” designation will likely be subject to probate. This often includes:

• Real Estate/Homes: Property owned solely in the decedent’s name requires court approval. However, for deaths on or after April 1, 2025, a primary residence valued up to $750,000 may qualify for a streamlined process under AB 2016 (Probate Code § 13151) – a Petition for succession, requiring a Judge’s Order, not a simple affidavit. It’s crucial to remember that to qualify, the decedent’s other non-real estate assets typically cannot exceed the separate $208,850 Small Estate limit. Distinguish this from the Small Estate Affidavit (strictly for real property under $69,625).
• Bank and Brokerage Accounts (Without Beneficiaries): Accounts held solely in the decedent’s name without a Payable-on-Death (POD) or Transfer-on-Death (TOD) designation will be subject to probate.
• Personal Property: This includes tangible items like furniture, jewelry, artwork, and vehicles.
• Business Interests (Sole Proprietorships): A sole proprietorship is legally tied to the individual. Assets are part of the estate and subject to probate.

What Assets Avoid Probate?

Fortunately, several asset types bypass the probate process, offering a smoother transfer to your heirs. These include:

• Assets with Beneficiary Designations: Retirement accounts (401(k), IRA), life insurance policies, and annuity contracts with named beneficiaries pass directly to those beneficiaries, outside of probate.
• Jointly Owned Property: Property held in joint tenancy with right of survivorship automatically transfers to the surviving joint tenant(s).
• Assets Held in a Revocable Living Trust: This is the cornerstone of many estate plans. Assets titled in the name of the Trust avoid probate entirely.
• Community Property: In California, community property generally passes directly to the surviving spouse.

How Does a Trust Help Avoid Probate?

A properly funded revocable living trust is the most effective way to avoid probate. By transferring ownership of your assets into the Trust during your lifetime, you retain control while simultaneously ensuring a seamless transfer to your beneficiaries upon your death. This sidesteps the court process, saving time, money, and maintaining your family’s privacy. I’ve been practicing as an Estate Planning Attorney and CPA for over 35 years, and I consistently advise clients to prioritize trust-based planning.

The CPA Advantage: Minimizing Tax Implications

As a CPA as well as an attorney, I bring a unique perspective to estate planning. A critical consideration often overlooked is the “step-up in basis” for inherited assets. This means that beneficiaries receive assets with a cost basis equal to the fair market value at the time of death, potentially eliminating capital gains taxes when they eventually sell those assets. Proper valuation is key here, and I can provide both legal and tax guidance to ensure your beneficiaries receive the maximum benefit. Furthermore, understanding the impact of Prop 19 is vital – under Prop 19, heirs can only keep a parent’s low property tax base if they move into the home as their primary residence within one year and the home’s value is within specific limits.

Protecting Digital Assets and Business Interests

Don’t forget about your digital life! Without specific RUFADAA language (Probate Code § 870) in your Trust or Will, service providers like Coinbase and Google can legally deny your executor access to your digital assets. And if you have a Limited Liability Company (LLC), remember the FinCEN 2025 Exemption: as of March 2025, domestic U.S. LLCs are exempt from mandatory BOI reporting under the Corporate Transparency Act; however, executors managing foreign-registered entities must still file updates within 30 days to avoid fines of $500/day.

What if Assets Exceed the Small Estate Limit?

If combined ‘probate assets’ (excluding the AB 2016 residence) exceed $208,850 (the threshold effective April 1, 2025), they are subject to formal probate; a Will alone does not allow you to bypass this limit. The good news is that the OBBBA permanently increased the Federal Estate Tax Exemption to $15 million per person effective Jan 1, 2026, offering significant relief for high-net-worth individuals.

How do California courts decide whether a will reflects true intent or creates ambiguity?

In California, a last will and testament operates within a probate system that emphasizes intent, clarity, and procedural compliance. When properly drafted, a will does more than distribute property—it creates legally enforceable instructions that guide courts, fiduciaries, and beneficiaries through administration with fewer disputes and less uncertainty.

• Clarity: Avoid vague terms that trigger probate disputes.
• Health: verify legal capacity at signing.
• Errors: check for missing amendments often.

When a will is drafted with California probate review in mind, it becomes a stabilizing roadmap rather than a source of conflict. Clear intent, proper authority, and compliant execution protect both families and estates.

Resources for Asset Management & Transfer

• Property Tax Reassessment: California State Board of Equalization (Prop 19)
  This page details the “Base Year Value Transfer” rules. It explains that heirs can only avoid a property tax reassessment if the inherited home becomes their primary residence and the Homeowners’ Exemption is filed within one year of the date of death.
• Real Estate Probate (AB 2016): California Probate Code § 13151 (Petition for Succession)
  The specific statute for the AB 2016 process. It outlines the requirements for using a court-approved “Petition” (not an affidavit) to transfer a primary residence worth $750,000 or less (gross value) for deaths occurring after April 1, 2025.
• Small Estate Affidavit: California Probate Code § 13100 (Personal Property)
  Access the statutory language for the “Small Estate Affidavit.” This procedure is strictly for Personal Property (cash, stocks, vehicles) and is limited to estates with a total value of $208,850 or less (effective April 1, 2025).
• Federal Estate Tax Exemption: IRS Estate Tax Guidelines
  The authoritative federal resource for estate valuation. It reflects the 2026 exemption increase to $15 million per person, which is critical for high-net-worth asset planning and determining if an IRS Form 706 is required.
• Unclaimed Assets: California State Controller – Unclaimed Property
  The primary portal for executors and heirs to search for “lost” assets—such as forgotten bank accounts, uncashed dividends, and insurance benefits—that have been remitted to the State of California for safekeeping.
• Business/LLC Compliance: FinCEN – Beneficial Ownership Information (BOI)
  The official portal for corporate transparency reporting. Most domestic and foreign entities (LLCs, Corps) must file a report. Executors must verify compliance, as failure to update control information within 30 days of death can result in federal civil penalties.