When someone dies without a will, they die what is called intestate, which means they did not exercise testamentary capacity. Testamentary capacity means I decide where my stuff goes when I die. You do that in one of two ways: you write a will or you create a trust. So if you havenot done either one, then you have given no direction to the world on what happens to yourself and your assets. In that case thestate has what is called the law of intestate succession and that law decides for you. Be sure to contact Steve Bliss, your choice for an estate planning attorney in: San Diego, Temecula & Wildomar.
The intestate succession law says who receives your assets and it says who is in line to be the administrator of your state which is another word for an executor. If somebody dies without a will, they generally leave a rather large mess behind for the loved ones and relatives to take care of. In that situation things become very expensive, very disorganized and very time-consuming and are generally stuck in court system for a lot longer than if you at least just had a simple will.
How Would You Define Probate?
The easiest way to look at probate is that it is a code of laws and a courtroom. The probate system is there to protect what are called individuals that are not competent. You are not competent if you are deceased, disabled or incapacitated.
If you or your loved one is any one of those three, then jurisdiction over that person rests with the probate court. So the purpose of the probate court is really to protect legally incompetent parties to make sure that their personal wellbeing is taken care of, that their financial assets are well taken care of, and that upon their death that their assets are distributed appropriately in terms of either via the person’s will or via the law of intestate succession.
Is Probate Applicable on Selected Estates?
No, probate applies to everyone. In California, the cutoff for what is called full administration of an estate is a gross estate value of $150,000. In San Diego, if you own a house, the odds are that the house is worth more than $150,000, so you would have a regular full-blown probate administration. People think that if they donot have that much stuff that they do not have to worry about probate. They are in for a very large surprise, because probate is based on the gross value of the assets and not the net worth. The calculation of gross estatevalue does not deduct debts. So if yourhouse is worth $500,000 and your mortgage is $400,000, then your net worth is only $100,000 but for probate purposes, your estate is worth $500,000. A lot of people have this misconception that, “Well, I only have a house and stuff like that so I am not going to have to go through probate,” and the answer is yes, you are going to go through probate because your estate is worth more than $150,000. So probate pretty much applies to everybody.
If your estate is less than $150,000, there are proceedings that you can do instead of a full blown probate. If you have a piece of real estate worth less than $150,000, there is a shorter form proceeding which takes a couple of months to do.It is called a petition to succession to real property for estates worth less than $150,000. That proceeding takes a few months to get through the system rather than about a year for regular probate. If there isnot any real estate and you just have some small bank accounts and personal property, then that can be handled by what is called the small estate affidavit, which is handled under Probate Code Section 13100.
A small estate affidavitis a relatively brief but detailed set of instructions that says that the person is deceased, these are the assets they have, this is who was entitled to receive the assets, please distribute the assets to these people. It is signed and notarized. Generally, the banks and the investment companies go along with that and distribute the smaller estates via an affidavit. Those are pretty much the three main ways that the probate court handles estates depending upon their size.
What is the Difference Between a Trust and Probate?
A trust is a legal entity that you create that is going to own your property. We are all natural persons but there are other persons besides us as natural persons. A corporation is a person, a limited liability company is a person and a trust is a person. So what you are going to do when you create a trust is you are going to set up this person which is your family trust, and this person is going to own all your assets. Now, you are in complete control of the living trust but you are not it and it is not you, there is you and then there is your trust.
The idea on the trust is that you are the person who is in-charge of the trust now, you are the Trustee. But what the trust documents states is that if you cannot manage it, then you name somebody else to be the manager of the trust in place of you and that person is called the successor trustee. Your successor trustee will administer your trust according to your instructions. This is how you avoid the probate system because you have set somebody up who can manage the trust and sign on behalf of the trust in case you cannot do it because you are deceased or dead. Because your Successor Trustee has the ability to sign on behalf of your trust, you do not need a judge’s signature on a court order to transfer assets for you. You have already taken care of it yourself.
So as to why should you have a living trust?The answer is very simple; so you create a mechanism to transfer your assets down to your heirs without having the court system and the judge involved.
For more information on Dying Without A Will, a free initial consultation is your next best step. Get the information and legal answers you’re seeking by contacting Steve Bliss today.