California Probate: Value of Assets

What is the value of your estate?  Most people consider an estate, millions of dollars or the large home only celebrities can afford.  In reality, people with fairly modest homes and money in the bank have an “estate’ large enough to cause their assets to be susceptible to the rules of Probate Court.   In California a new law was passed in 2012 providing a new minimum value of assets to warrant formal Probate.  The law changed the minimum value of $100,000 to $150,000.   This means that if the total value of your assets is less than $150,000 your estate does not need to go through formal Probate involving the Court.  Instead, assets can be transferred informally by creating an Affidavit.  However, if your assets are valued at $150,000 or greater, a formal Probate may be required to transfer assets upon death.

Let’s say Mom and Dad, own their home with a mortgage amount of $250,000 but if the home was sold, it would be valued at $350,000.  Some may think that the total asset is valued at $100,000.  For purposes of Probate, we use the fair market value or $350,000 in our example.   Assuming Mom and Dad were to die in an accident without an estate plan, the home valued at $350,000 would cause a formal Probate since it exceeds the $150,000 rule.  The ordinary fees allowed to the attorney and personal representative handling the Probate for a single home valued at $350,000 would be $10,000.  Extraordinary fees and other costs may apply in order to finalize the Probate.

Let’s assume that Mom and Dad also had the following additional assets:  $5,000 in a checking account, $50,000 in savings, $100,000 held in a Certificate of Deposit and 2 cars valued at $30,000.  With these additional assets the total estate would be valued at $535,000.  The ordinary fees to the attorney and personal representative handling the Probate are now $13,700.  Extraordinary fees and other costs may apply in order to finalize the Probate.

Whether your estate is valued at $150,000 to $10 million dollars, a  properly drafted estate plan can avoid formal Probate allowing peace of mind knowing a plan is in place should a tragedy occur.

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