If a deceased spouse's estate is worth less than $20,000, it may be set aside and distributed to the surviving spouse and/or minor children. The relevant law is California Probate Code Sections 6600 to 6615. The purpose is to provide assets to a surving spouse and minor children, even contrary to what a Will may say.
To make use of the small estate set aside law, however, the "net estate" cannot exceed $20,000.
What is the "net estate" and how do you calculate it?
A "net estate" is the value of the assets includable in the estate minus any liens or encumbrances on the assets. For example, if the only asset of the estate is a parcel of land worth $100,000, and it has a mortgage of $90,000, then the net estate would be $10,000.
The estate does not include non-probate assets such as life insurance, retirement accounts, joint tenant accounts, assets subject to a probate homestead, and real estate outside of California.
Because of the relatively small amount of the small estate set aside, it usually doesn't have a significant impact on a deceased spouse's Will. However, a court has discretion in allowing for a small estate set aside.
Thus, if you want to leave your estate to someone other than your surviving spouse or children:
- Make it clear in the Will
- Request that the disposition not be affected by the small estate set aside laws, and
- Clearly indicate assets have been provided for the surviving spouse and/or children outside of the probate estate.