In California, a probate homestead allows a surviving spouse and children to remain in the deceased spouses home after he or she pass away. It may also have the effect of superseding the deceased spouse's wish to have his or her home be distributed to a non-family member upon death.

This could be invoked by a surviving spouse or children if the deceased spouse willed the home to another person to their exclusion. Although this may ultimately frustrate the deceased spouse's wishes, it may be used by a surviving spouse and minor children to protect the home from creditors, the beneficiaries of the deceased spouse's Will or his or her heirs at law.

Waivers

Like a family allowance, it's possible to obtain a waiver from a spouse of his or her right to request a probate homestead. In addition, provisions in your Will or Trust of your intent to leave the home to someone other than your surviving spouse may help prevent the court from ordering a probate homestead for the benefit of your surviving spouse.

Often, it is best to deal with waivers prior to, or at the beginning stages of marriage, as that is when future spouses are most amenable to such agreements. Once spouses have been married for a while, a request for a waiver may raise suspicions in cause partners to lose faith in one another.

The vast majority of clients we encounter never have concerns about a probate homestead. However, where the strength of a marriage has weakened, or where the parties are contemplating distributing property in a non-traditional way (i.e., leaving property for the benefit of someone other than the surviving spouse or children), it would be wise to consider the possibility of a probate homestead.

A family allowance can be a serious drain on the assets of a decedent's estate. As such, one may want to consider options to soften its potential blow. It's important to note that family allowances are not a major issue for most clients. Some situations more than others may call for considering one of the following options to limit his or her family members' ability to request a family allowance.

Waiving a family allowance

Under California Probate Code Section 141(a)(5), a surviving spouse may waive his or her right to a family allowance. The waiver must be in writing, and the surviving spouse must do so voluntarily and have knowledge of the relevant facts. The precise form of a waiver is beyond the scope of this post; however, more specifics are laid out in California Probate Code Sections 140-147.

Another strategy is to force the surviving spouse or other family members to decide between a gift left to them in the deceased spouse's Will or to request that a court grant a family allowance. Prior to death, the deceased spouse would include provisions in his Will which would cause the beneficiary to forfeit their gift if  a family allowance is requested.

If the gift is substantial, and there's a risk that a judge may deny or only grant a small family allowance, the family members may think twice before requesting a family allowance. There's no statutory support for this approach, and to date, this technique does not appear to be tested in a court of law; however, it may be a worthwhile strategy to consider in situations where a waiver is not possible.

The impact of a family allowance cannot be underestimated, and for certain clients, it is imperative to think through how it might affect their estate plan.

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:

1. Make it clear in the Will
2. Request that the disposition not be affected by the small estate set aside laws, and
3. Clearly indicate assets have been provided for the surviving spouse and/or children outside of the probate estate.

During the probate of an estate, certain family members of the deceased person may request an allowance to be paid from the estate for their maintenance. California Probate Code Section 6540 states that:

(a) The following are entitled to such reasonable family allowance out of the estate as is necessary for their maintenance according to their circumstances during administration of the estate:

(1) The surviving spouse of the decedent.

(2) Minor children of the decedent.

(3) Adult children of the decedent who are physically or mentally incapacitated from earning a living and were actually dependent in whole or in part upon the decedent for support.

(b) The following may be given such reasonable family allowance out of the estate as the court in its discretion determines is necessary for their maintenance according to their circumstances during administration of the estate:

(1) Other adult children of the decedent who were actually dependent in whole or in part upon the decedent for support.

(2) A parent of the decedent who was actually dependent in whole or in part upon the decedent for support.

(c) If a person otherwise eligible for family allowance has a reasonable maintenance from other sources and there are one or more other persons entitled to a family allowance, the family allowance shall be granted only to those who do not have a reasonable maintenance from other sources.

In other words, this statute covers people who primarily relied on the deceased person for support. It also limits the ability of those who already have a reasonable amount of resources from requesting an allowance.

Family allowances are problematic because of the significant amount of time it takes to go through the probate process in California. Often, probate administration lasts a year or more. Thus, for example, if a decedent named non-family members as beneficiaries of his or her Will, it's possible that the family allowance would eat away at the named beneficiaries' inheritance.

Some counties limit the amount of time that a family allowance will last, but California Probate Code Section 6543 states that:

(a) A family allowance shall terminate no later than the entry of the order for final distribution of the estate or, if the estate is insolvent, no later than one year after the granting of letters.

(b) Subject to subdivision (a), a family allowance shall continue until modified or terminated by the court or until such time as the court may provide in its order. 

In other words, the family allowance may continue until (1) the judge issues the final order distributing the assets of your estate, or (2) if the liabilities of the estate exceed its assets, no later than one year after "Letters" (the document officially appointing your Executor or Administrator) is granted.

It's therefore important to talk with an estate planning lawyer to determine whether a family allowance poses a significant risk in your particular case.