What Is Considered Exempt Property in Probate?

While going through probate and estate management, you might have several questions for your attorney. However, there is one crucial question that you should ask before beginning the process: What is exempt property in probate?

Many people assume that every single one of a person’s assets will be part of their estate. However, the exempt property rules in probate dictate which assets must go through probate court. Whether you’re handling a loved one’s estate or planning for your own future, it’s helpful to understand the different types of exempt property in estate law.

Below, the team at Radiant Probate & Estate Law, Inc. explains what you need to know about probate-exempt assets in California.

Assets With Joint Tenancy Do Not Need To Go Through Probate

If you ask an attorney, “What is exempt property in probate?” they may tell you that real estate could be part of someone’s estate inventory or be completely exempt. It varies by case, with joint tenancy being the main reason for its exemption. Joint tenancy simply means that two people legally share property and have equal rights to it.

For example, suppose a married couple owns their house together. If one spouse passes away, the other has a right of survivorship. Rather than the home going through probate with other assets, the surviving spouse will retain ownership of the property.

What happens when the second owner passes away? Joint tenancy will no longer apply. The property could then be subject to probate, depending on the decedent’s estate planning measures.

Assets Within a Trust Are Exempt From Probate

What is exempt property in probate? The answer could depend on whether the decedent set up a trust. Many people establish living trusts during the estate planning process because this avoids the need for probate.

Outlining your assets within a will puts your final wishes on paper. However, it will not go into effect until your passing and would still be subject to probate. If you want to keep assets out of probate, consider establishing a living trust.

Your trust could include plenty of valuable assets, such as:

• Real estate
• Vehicles
• Bank accounts
• Jewelry
• Personal items

Rather than naming an executor, like you would when creating a will, you’ll appoint someone to be a trustee. This individual is responsible for managing the trust after your death.

Financial Accounts Can Be Considered Probate-Exempt Property

If you die without a will or trust, and you don’t name a beneficiary on any of your financial accounts, they could all be subject to probate. That’s why it’s smart to take advantage of beneficiary designations on the following:

• Bank accounts
• IRAs
• 401(k)s
• Investment accounts

When you name a beneficiary, the account will be considered payable-on-death. Once the institution learns about and verifies someone’s death, it can then issue payment to the beneficiary. For individuals with large amounts of money in these accounts, making them payable-on-death could significantly impact their estate’s inventory when it comes time for probate.

Active Life Insurance Policies Can Also Be Exempt

You may name beneficiaries in life insurance policies as well. These are also payable-on-death, meaning that a person of your choosing would receive the assets shortly after your passing.

Imagine your life insurance beneficiary is also the executor of your will. While they might have to compile and organize other assets to go through probate, the life insurance policy should be exempt. Knowing what exempt property in probate is could make a big difference for any loved ones managing a decedent’s estate.

The Important Role of a Probate Attorney in Santa Clara County

Going through probate can be stressful, overwhelming, and time consuming. That’s why it’s so important to have a knowledgeable lawyer on your side. Attorneys understand which property is not subject to the probate process and can outline what you can expect.

Executors in charge of estates will likely have a lot of questions about the process and their duties. Experienced lawyers can answer these questions and provide guidance every step of the way. If you are dealing with legal challenges after a loved one’s passing, consider meeting with a probate attorney in Santa Clara County to review the next steps.

Could an Estate Avoid Probate in California Entirely?

For someone who’s unfamiliar with estate laws, the probate process may seem inevitable. However, you may be able to avoid it altogether. Understanding probate-exempt assets and the state’s requirements is key to determining whether an estate needs to go through probate.

What is exempt property in probate? Real estate, financial accounts, life insurance policies, and other assets could be considered exempt property, depending on the circumstances. For instance, payable-on-death accounts and property where another person has the right of survivorship may avoid probate, along with assets held in a trust.

The estate’s total value could make it exempt from probate. California’s small estate probate threshold for personal property is $184,500, while real property is subject to different rules. If the value of one’s probate-eligible assets exceeds the threshold, the estate might not be able to avoid probate.

It’s possible for someone to pass away with minimal assets to their name. If their estate’s value doesn’t meet the state’s threshold, their kin might not need to take the estate through probate. Consult an attorney to learn more about probate’s legal complexities and how to approach the process.

Contact Radiant Probate & Estate Law, Inc. for Personalized Support

Figuring out what is exempt property in probate can be confusing, especially if you’ve never gone through the process before. Team up with a qualified attorney who understands how probate works. They can guide you through the process, answer your questions, and be a trusted resource.

At Radiant Probate & Estate Law, Inc., we aim to help clients with all aspects of probate and estate planning. Whether you’ve been delegated to handle a loved one’s estate or want to take care of your own affairs, we have legal solutions. Contact our firm today at (650) 481-7805 to request a consultation.