When it comes to retirement accounts, the good news is that, if properly set up, they generally do not need to go
through probate in California. The key lies in correctly designating your beneficiaries, both primary and secondary.
Let’s delve deeper into this crucial aspect of Estate Planning and why it matters.
Understanding California Probate Proceedings: A Brief Overview
When someone passes away, the assets and property they leave behind, collectively known as the “decedent’s estate,” must find new owners. In California, this process typically involves a court proceeding called “probate.” In
essence, a California probate judge oversees the transfer of assets in accordance with state laws. Practically, this means that all assets and property within the decedent’s estate are effectively “frozen” until the probate judge authorizes their transfer, which can be a cumbersome and time-consuming process.
However, there are exceptions, and some assets and property can bypass probate proceedings when the correct legal procedures are followed. Retirement accounts fall into this category. Other assets that can transition without probate include:
- Real estate owned in joint tenancy: When one joint tenant passes away, the surviving tenant inherits the property without court involvement.
- Co-owned assets, such as financial accounts: These assets can often be transferred to the surviving co-owner without the need for probate.
- Real estate with a beneficiary deed: The beneficiary becomes the property’s owner upon the original owner’s death.
- Assets held within living trusts or other types of trusts: These assets usually transition to new owners per the trust’s terms, avoiding probate.
Retirement Accounts in California: A Special Case
Retirement accounts typically sidestep probate proceedings in California. This is primarily because they function as transfer-upon-death instruments. The crucial step here is to designate beneficiaries correctly for your retirement accounts, ensuring they receive the assets as you intended. It’s also essential to name secondary beneficiaries incase the primary beneficiaries pass away before you.
The transfer of retirement accounts post-death is usually swift and hassle-free, involving minimal bureaucratic red tape. Typically, the account administrator requires a copy of the death certificate and proof of identity for the designated beneficiary. It’s worth noting that tax implications and potential fees may apply, as per the account’s
contractual agreements.
Excluding Retirement Accounts From Your Will
Given the automated transfer mechanism of retirement accounts, it’s advisable to omit any reference to these accounts in your Last Will and Testament. Including them could lead to confusion and potential legal issues.
When Retirement Accounts Might End Up in Probate
While retirement accounts are generally designed to avoid probate, there are scenarios where they might inadvertently end up in the probate process:
- Failure to name beneficiaries: If you haven’t designated beneficiaries or if your beneficiaries predecease you, the account could be subject to probate.
- Naming your Probate Estate as beneficiary: Designating your estate as the beneficiary rather than individuals can lead to probate.
- Naming a minor as a beneficiary: Minors cannot directly inherit retirement accounts, which may necessitate court supervision.
- Failure to list secondary beneficiaries: If primary beneficiaries pass away before you, and there are no secondary beneficiaries, the account might be subject to probate.
Estate planning in California can be intricate, and correctly managing retirement account beneficiaries is a crucial
component of it. To ensure your assets transition seamlessly, it’s advisable to seek legal guidance from experienced
California Estate Planning attorneys, such as those at Guardian Litigation Group.
Contact Guardian Litigation Group for Expert Estate Planning:
For more information, contact our estate planning attorneys at Guardian Litigation Group. Our Mission is to provide unparalleled Estate Planning legal services for our clients. We can be reached via our contact page or by phone at (949) 444-5474.
