San Diego Estate Planning Lawyer Blog
An “estate” does not necessarily include all of a person’s assets. In the context of estate planning, an estate refers to property subject to distribution under a person’s last will and testament—that is to say, their probate estate. This may exclude some or all of a person’s property depending on its type and ownership.
Assets That are Not in Your California Probate Estate
For example, any assets that you jointly own with someone else are not part of your probate estate. This would include a joint bank account or a house you co-own as a joint tenant. Upon your death, the surviving co-owner simply assumes full ownership of the asset. Your probate estate also excludes any life insurance policy or asset payable to someone else upon your death, such as a retirement account. And for purposes of determining your California probate estate, any real property that you own in another state—say a rental property in Arizona—is excluded.
Determining the Value of Your Probate Estate
It is actually impossible to determine the exact value of your probate estate before you die. This is because an estate’s assets must generally be valued as of the date of the person’s death. In some cases an estate may use an “alternate” valuation date of six months after the person’s death. This is done for purposes of minimizing the federal estate tax, which does not apply to the vast majority of California estates.
For some assets determining the date-of-death value is straightforward. A bank account, for instance, is worth whatever the balance was on the date of death. But what about an asset that fluctuates in value such as a stock? The basic rule is to take the average of the highest and lowest trading price of the stock on the date of death. So if a person died on April 1, 2016, owning 100 shares of Apple, Inc., the value of the stock for estate purposes would be the average of the highest ($110.00) and lowest ($108.20) reported prices for that day, or $109.10 per share. The estate would then report the total value of the asset as $10,910.
Why Estate Valuation Matters
The total value of your estate affects how it is administered by the courts. In California, an estate composed entirely of personal property—in other words, the deceased did not own any real estate in California—and worth less than $150,000 may be administered through a simplified probate process. Estates with real property or more than $150,000 in assets must go through the regular probate process.
California requires almost all estates to be appraised by a probate referee. The referee is an official licensed by the California State Controller’s office to value an estate’s non-monetary assets. Probate referees may also appraise assets of a non-probate trust, even though it is not legally required.
If you have questions about the potential value of your probate and non-probate assets, you should speak with an experienced California estate planning lawyer. Contact the Law Office of Scott C. Soady if you need assistance with any estate planning matter.