How To Avoid Probate

By Pantea I. Fozouni

April 7, 2020

Hi everyone! My name is Pantea Fozouni with Palm Desert Law Group and in today’s video we are going to talk about how to avoid probate.

How to avoid probate

This is a question I get asked all of the time. It’s probably the number one question I get asked. Well probably number two after what is probate. So I’m going to talk about both of those today. First thing is what is probate? I’m sure a lot of you have heard about it. Most people don’t necessarily know what it is, but we know that it’s bad and we want to avoid it and so I want to educate you a little bit and then we’re going to talk about how to avoid it.

Basically probate is the legal process that your assets have to go through if you die with any of those assets still in your name. So we all know how easy it is to transfer property while we’re living.

If we’ve got a car, we sign the pink slip, give it to the new owner. If we’re selling a house, we sign the deed, sign all of the other paperwork that’s typically involved, record it, that’s done. We can give things away, we can give things to charity, you can do whatever we want, but obviously once we die, we can’t do that anymore.

A convoluted system

So over the years attorneys as well as people in the legislature came up with a very convoluted way to transfer those assets out of your name when you’re no longer there to sign. And unfortunately that system is really designed to protect creditors first everyone was interested in making sure that the creditors got paid a lot of times at the expense of beneficiaries. So what probate is, is that court process. Now that court process is totally public.

Basically if you’re bored one day you can go seat in your local probate court. You can hear all of the cases that are happening that day. If you have access to a computer and in today’s day and age, we all do with our little smart phones and devices. You can basically go onto the court website and find out all of the probate cases that are happening in your jurisdiction.

Two populations who are particularly vulnerable

You can find out who’s died, who’s going to inherit from them, what they’re going to inherit from them, when they’re going to inherit from them, and that might not seem like a bad thing or a big deal except that there are two populations who are particularly vulnerable. We’ve got those who are really, really old. Who are going to be beneficiaries as well as those were really, really young. Why? Because all of a sudden, you know these 18, 19 year olds who are inheriting, all of a sudden there are all these new best friends involved and trying to basically take advantage of them.

So that’s the first thing. It’s public process. The second thing is that it’s really slow here in California. So in California minimum it takes about 10 to 15, 16 months to go through at the very least. We wish that it could be faster. There are so many court cases involved. Such a big state that that’s kind of just the minimum.

That’s unfortunately what we’re stuck with. But three, the thing that most people are concerned about is how expensive it is. So it’s about 5% of your probate estate. So 5% doesn’t sound so bad.

Quite if you’ve got an estate of about 500,000 which is pretty easy to do, especially in California, if not more, 5% of 500,000, we’re talking about $25,000 that’s taken off of the top. That’s taken away from your beneficiaries, from your kids, from your grandkids. That is going to attorneys. It’s going to executors, it’s going to appraisers, bond fees, court costs, so on and so forth.

And the crazy thing about that is that that’s voluntary, right? If we do some basic planning, we can completely avoid probate. So that comes to the second part of the video is how do we avoid probate? Well, having a will alone is not going to avoid probate. Having the will, you are going to be able to designate who you want to receive your assets and where you want your stuff to go. But it’s not going to avoid probate.

The only way to avoid probate is...

You still have to go through the probate system. You’ve just made a couple of decisions, but it’s still, you still have to go through everything else. The only way to avoid probate is to have a custom trust that makes sense for you and your family and to make sure it’s properly funded. So what does that mean? A trust, I like to think of it as a safety deposit box, right?

Or like a treasure chest. The safety deposit box at the bank you get protection when you actually put things into it. So if you’ve got your jewelry in that safety deposit box at the bank and someone breaks into your home, you’re covered because that jewelry wasn’t in your home. It was in the bank in that safety deposit box. However, if you’ve got that safety deposit box at the bank, but you’ve got your jewelry on your nightstand and someone breaks into your home, all of a sudden there’s no protection. And so having that safety deposit box was a total waste of time, right?

Why you need a trust

So a trust basically is going to say where you want your assets to go, who you want to inherit from you, who you want to be in charge of making sure that everything is followed according to your wishes. But we have to make sure that not only are those instructions there, but the things are adequately inside of it so we can avoid that probate process.

So if you own real property, we want to make sure that’s titled in the name of the trust. If you have bank accounts, we want to make sure it’s in trust account. If you have retirement assets as well as life insurance, those don’t have to be in the trust but we want to make sure that you’ve got the correct beneficiaries. And I have feeling we’ll have to do a whole different video just on that topic alone. But we want to make sure that those are titled correctly and any other assets, we just want to make sure that they’re owned in the name of the trust.

So that’s what trusts are. That’s how to avoid probate. So just as a reminder, the only way to really avoid probate is to make sure you have a properly drafted trust that makes sense, that’s custom drafted for you and your family, not one of these one size all trust that we see on the internet as well as from some other attorneys.

What are your next steps?

We want it to make sure it’s customized for you and we want to make sure that all of your assets are properly owned in the name of the trust. If you are at that point in your life where you need to set up a trust or if you have a trust that you haven’t reviewed in at least three years, I’d definitely love to speak with you about your family’s situation to make sure that we have a plan in place that’s going to continue to work for you and your family for the rest of everyone’s lives. As a reminder, my name is Pantea Fozouni with Palm Desert Law Group, and I’m looking forward to speaking to you again in our next video.

 This article is a service of Pantea I. Fozouni, Family Business Lawyer®. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session™, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. Go online today to schedule a Family Wealth Planning Session and find out how to get this $750 session at no charge.

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