In California, the distribution of the assets of a person’s estate, upon their death, is generally determined according to his or her will, or if there is no will, then according to the intestate laws of California.  Typically, distribution of such assets will occur through a court proceeding called probate.   However, there are a number of types of assets in which California law will recognize as transferring outside the will or intestate law based upon the form of ownership or the beneficiaries designated on the specific asset. In essence, the form of ownership or the beneficiary designation will transfer the asset outside of the person’s will because the form of ownership or the beneficiary designation are recognized by California law as a substitute to the will. This can be good news because these types of assets do not need the formal procedures of probate of an estate in order to be transferred upon a person’s death.  This blog discusses some of the more widely used situations but this is not meant to be an exhaustive list.

Property that is titled may be held in a form called joint tenancy.  Property held in this joint tenancy form will automatically pass to the surviving joint tenant(s) “by right of survivorship” upon the death of the other joint tenant.  Real property, bank accounts, motor vehicles, and corporate securities may all be held in joint tenancy (with some exceptions). Other forms of personal property may be held in joint tenancy according to written agreements. So, when a person dies holding a joint tenant interest, that interest will not be subject to the person’s will or to probate unless the joint tenancy ownership is severed or terminated.

Married couples may hold real property as community property with right of survivorship. This form of ownership also avoids probate and allows easy title transfer to the surviving spouse by use of an affidavit procedure rather than formal probate. This is another type of ownership where the person’s will has no power over the real property upon the death of a spouse. 

There are such accounts called pay-on-death (POD) account.  These accounts work to avoid probate because, after the death of the account owner (or if there are multiple account owners, after the death of the last account owner), the account transfers and is payable to the “POD payee,” the person named after the POD designation. In many circumstances, a POD account may be preferable to holding the account in joint tenancy because the POD payee has no ownership interest until the death of the account owner(s).  Also, during the life of the account owner(s) the POD payee can be changed or canceled at any time.

Death benefits payable under a life insurance policy will be distributed to the designated beneficiary(ies). One or more persons can be designated as beneficiaries on a life insurance policy.  A trust can also be named a beneficiary of a life insurance policy. Life insurance policies also allow for contingent beneficiaries in case the named beneficiaries predecease the insured person. Ultimately, life insurance policies can be a  great estate planning tool in which the payments made to the named beneficiaries will not be subject to probate or to the deceased person’s will.

Like life insurance policies, annuities, pension plans, and individual retirement accounts (IRAs), with certain exceptions, pass to designated beneficiaries and are not subject to probate or to the deceased person’s will.

It is important to note that, for a person who already has a will or a trust, the form of ownership of certain types of assets or the beneficiary designations on certain types of assets may determine the distribution of those assets rather than the estate plan in place. Any person who resides and owns assets in California should review the form of ownership and beneficiary designations for all of their assets (with that of their estate plan) to be sure that property will be distributed according to their intentions. Any person interested in the above issues or who would like to discuss their estate planning options should contact Chilina Law Firm or another estate planning law firm for a review of the assets and estate planning documents, if any.

Authored by Karen J. Chilina and co-authored Gregory J. Chilina

Chilina Law Firm, a Professional Corporation, is a full-service estate planning, probate, trust administration, business law, and real property law firm that provides a wide-range of advising, transactional, and litigation services to its clients from its office located in Atascadero, California. The firm’s attorneys represent individuals and business entities in an assortment of transactional and litigation matters involving estate planning (including trusts, wills, powers of attorney, and medical directives), probate, trust administration, as well as general business law, contracts, corporate governance, land use, and real property. Chilina Law can be contacted by telephone at (805) 538-5038 or by email atinfo@chilinalaw.comor visit the Chilina Law Firm Chilina Law Firm is based in Atascadero, California and serves North San Luis Obispo County communities, including Santa Margarita, Atascadero, Templeton, Paso Robles, and San Miguel.

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