Huntington Beach, California Attorney, Mark W. Bidwell

Alternative Asset Transfers on Death to Avoid Probate

Trusts

A Trust is a contract between the creator of the Trust, (the “Settlor”) and a Trustee for the benefit of another person, (the “beneficiary”). The Trust is created while the person is living, hence the term “living trust.”  Typically at the date of creation of the Trust the Settlor, Trustee and beneficiary are the same person. Legal title of property is transferred from the Settlor to the Trust. The Trust document identifies a third party as the “Successor Trustee.” The Successor Trustee assumes his or her duties upon the death of the Settlor. The Successor Trustee has the authority to transfer assets legally titled into the trust from the deceased Settlor to the beneficiaries identified in the Trust. 

Designated Beneficiary Contracts

Contracts with designated beneficiaries are life insurance policies, IRAs, Keoghs, and 401(k) accounts. Contracts between the owner of the asset and the financial institution are transferred by the owner designating the beneficiaries in writing to the financial institution. Legal title of these assets is transferred without probate. Benefits are paid directly by the financial institution to the named beneficiaries.  Bank accounts that are set up as pay-on-death accounts (PODs) or "in trust for" accounts (a "Totten Trust") with a named beneficiary also pass to the beneficiary without probate.

Joint Tenancy

Joint tenancy is a way for two or more people to own property in equal shares so when one joint tenant dies the property passes to the surviving joint owner without having to go through probate court. A decedent’s ownership in a joint tenancy automatically transfers by operation of law to the surviving owner and is not part of an estate for transferring, but is included in the estate for assessing estate taxes.  Paperwork needed to transfer real estate owned in joint tenancy is an affidavit death of joint tenant and a death certificate, filed and recorded with the county recorder.

Small Estate Declaration

Small estate declaration is for estates that do not contain real estate and are less than $150,000. Transfer of legal title to the heirs (or the beneficiaries named in the Will) is accomplished by using a declaration. This method is called the Section 13100 Procedure. 13100 is the section of the California Probate Code authorizing this type of transfer. This procedure has certain rules:  1) it cannot be used to transfer legal title to real property; 2) a period of 40 days must pass before transfer is made; 3) a written declaration of the facts signed under penalty of perjury must be provided to the holder of the asset by the person requesting transfer.