Q. I hear that there is a new California law which exempts some homes from the burden of probate. Do you know anything about this?
A. Yes, and you heard correctly. Effective April 1 of this year, the new law, known as AB 2016, permits the passing of a decedent’s home valued up to $750K without a full probate, thereby permitting the successors to avoid the time, burden and expense of a full probate administration.
There are some requirements: The new law is only effective for decedent’s dying after April 1, 2025, it requires that the home be the decedent’s “primary residence”, and the filing of simple petition in the probate court with notice to all heirs and other persons named in the decedent’s Will or Trust. While a probate court order is still required, the procedure is much simplified over a full probate and would typically be handled in one court hearing, rather than in multiple hearings over the course of a year or more for a full probate. Further, the value of the primary residence will be indexed to inflation and adjusted every three years, with the first adjustment to be April 1, 2028.
So, for homeowner’s who die without having formally placed their home into a Living Trust, and whose affairs would otherwise require resort to the probate process, this new “primary residence exemption” can now avoid lengthy probate proceedings for family homes which qualify. Unfortunately, it does not apply to other real properties, such as rental property or vacation homes. Still, it is definitely a welcome new rule for most families.
More good news: If the decedent owned personal property which did not have beneficiary designations, such as bank accounts in his or her name only, collectibles, furniture, and the contents of his home, that personal property could now be passed on via a simple Affidavit, provided that the total value of this personal property does not exceed $208,850. Further, when valuing financial accounts and other personal property, assets that bypass probate (such as assets held in a Living Trust or financial accounts with Pay On Death Beneficiary designations) are excluded from the total value, making it easier in many cases to stay within that $208,850 threshold. This cap – as well – will be adjusted every three years based upon inflation.
So, in short, many more families should now be able to avoid the expensive and time-consuming probate process in order to pass on their loved one’s principal residence and other assets to their surviving next of kin.