02/18/2025
Understanding Probate and California’s Small Estate Exception
Probate is the legal process for distributing a decedent’s estate based on their will or, absent a will, through intestate succession laws. While probate provides judicial oversight to prevent fraud and abuse, it can be time-consuming and costly. For this reason, many people seek ways to bypass probate, and the law offers several avenues for doing so.
Assets held in joint tenancy, community property with right of survivorship, or designated as payable-on-death (POD) or transfer-on-death (TOD) accounts automatically transfer to named beneficiaries without probate. Similarly, assets placed in a living trust or designated in retirement accounts and insurance policies can pass directly to beneficiaries.
California law also includes a “small estate” exception, allowing heirs to claim an estate without formal probate if the estate’s value falls below a certain threshold. This streamlined process saves time and reduces costs, which can be particularly significant for smaller estates.
As of April 1, 2022, the small estate threshold was $184,500. However, with rising home prices in California, the current threshold often excludes estates whose primary asset is real property. For instance, the average home price in California was $750,709 as of March 2024. To address this, raising the small estate threshold for primary residences to $750,000, starting on April 1, 2025, with periodic adjustments based on the Consumer Price Index (CPI).
The bill aims to make probate avoidance more accessible, especially for middle-income families, by allowing home equity to transfer to heirs without the financial and time burden of probate.
Understanding Probate and California’s Small Estate Exception
Probate is the legal process for distributing a decedent’s estate based on their will or, absent a will, through intestate succession laws. While probate provides judicial oversight to prevent fraud and abuse, it can be time-consuming and costly. For this reason, many people seek ways to bypass probate, and the law offers several avenues for doing so.
Assets held in joint tenancy, community property with right of survivorship, or designated as payable-on-death (POD) or transfer-on-death (TOD) accounts automatically transfer to named beneficiaries without probate. Similarly, assets placed in a living trust or designated in retirement accounts and insurance policies can pass directly to beneficiaries.
California law also includes a “small estate” exception, allowing heirs to claim an estate without formal probate if the estate’s value falls below a certain threshold. This streamlined process saves time and reduces costs, which can be particularly significant for smaller estates.
As of April 1, 2022, the small estate threshold was $184,500. However, with rising home prices in California, the current threshold often excludes estates whose primary asset is real property. For instance, the average home price in California was $750,709 as of March 2024. To address this, raising the small estate threshold for primary residences to $750,000, starting on April 1, 2025, with periodic adjustments based on the Consumer Price Index (CPI).
The new law, starting April, 1, 2025, aims to make probate avoidance more accessible, especially for middle-income families, by allowing home equity to transfer to heirs without the financial and time burden of probate.
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