Transferring real property without going through a full probate process in California is frequently impossible. This is often because much of the real estate in populated areas of California has a high market value. That being said, there are a couple of methods to transfer real property when the dollar thresholds under California law are met.

Petition to Determine Succession to Real Property

The first method involves a special petition to the court requesting that the court issue an order determining who the new owner of the property is. The Judicial Council of California has created a special form for this purpose. Use of this form involves a couple of requirements:

1. There is no probate proceeding in California of the deceased person's estate, or the personal representative may consent to using this method; and
2. The gross estate is valued at no more than $150,000.

The value of the gross estate is determined by preparing a special form called an "Inventory and Appraisal", which lists the assets that would've been subject to probate. This form is then sent to special court-appointed "probate referees" (appraisers) who then provide the market values of those assets as of the date of death. The relevant law is found in California Probate Code Sections 13150-13158.

Affidavit re Real Property of Small Value

The second method involves an affidavit that is filed with superior court and requires that the value of all of the deceased person's California real estate not exceed $50,000. Again, the value of the real estate is determined by a probate referee on an Inventory and Appraisal. This procedure can only be used after 6 months have passed since the date of death. Once the affidavit is filed with the superior court, a certified copy is then recorded in the county where the real estate is located. The relevant law is found in California Probate Code Sections 13200-13210.

As you can imagine, one major hurdle is that real property of any consequence in California is rarely less than $150,000 or $50,000, which is why it is especially important for owners of real estate in California to engage an estate planning lawyer.

The California probate process is expensive and time-consuming. It also involves documents to be filed with the Court, which are public. As a result, revocable living trusts are generally considered the most ideal estate planning tool rather than solely a Will, which is always subject to probate.

That being said, even where only a Will is used, there may be some instances where the probate process may be avoided. Generally, speaking, these methods are usually employed by heirs or beneficiaries of people who have relatively little wealth. In other words, if you have a substantial amount of assets, you, your family, and your beneficiaries will most likely be better off, from an economic perspective, setting up a revocable living trust.

Small Estate Affidavit

If your real property and personal property does not exceed $150,000, then your beneficiaries or heirs may utilize a "Small Estate Affidavit" to collect your assets after you pass away. California Probate Code Section 13100 provides the relevant law:

Excluding the property described in Section 13050, if the gross value of the decedent’s real and personal property in this state does not exceed one hundred fifty thousand dollars ($150,000) and if 40 days have elapsed since the death of the decedent, the successor of the decedent may, without procuring letters of administration or awaiting probate of the will, do any of the following with respect to one or more particular items of property:

(a) Collect any particular item of property that is money due the decedent.

(b) Receive any particular item of property that is tangible personal property of the decedent.

(c) Have any particular item of property that is evidence of a debt, obligation, interest, right, security, or chose in action belonging to the decedent transferred, whether or not secured by a lien on real property.

It's important to realize that your beneficiaries or heirs must first wait 40 days after you death. In addition, this process cannot be used to transfer your real estate (even though the value of your real estate is used in determining whether you may avail yourself of the Small Estate Affidavit procedure). 

People occasionally have questions about what is included in the $150,000 calculation. First of all, it does not include real or personal property outside the state of California. California Probate Code Sections 13050 and 13500 provide some exclusions:

California Probate Code Section 13050:

(a) For the purposes of this part:

(1) Any property or interest or lien thereon which, at the time of the decedent’s death, was held by the decedent as a joint tenant, or in which the decedent had a life or other interest terminable upon the decedent’s death, or which was held by the decedent and passed to the decedent’s surviving spouse pursuant to Section 13500, shall be excluded in determining the property or estate of the decedent or its value. This excluded property shall include, but not be limited to, property in a trust revocable by the decedent during his or her lifetime.

(2) A multiple-party account to which the decedent was a party at the time of the decedent’s death shall be excluded in determining the property or estate of the decedent or its value, whether or not all or a portion of the sums on deposit are community property, to the extent that the sums on deposit belong after the death of the decedent to a surviving party, P.O.D. payee, or beneficiary. For the purposes of this paragraph, the terms “multiple-party account,” “party,” “P.O.D. payee,” and “beneficiary” are defined in Article 2 (commencing with Section 5120) of Chapter 1 of Part 2 of Division 5.

(b) For the purposes of this part, all of the following property shall be excluded in determining the property or estate of the decedent or its value:

(1) Any vehicle registered under Division 3 (commencing with Section 4000) of the Vehicle Code or titled under Division 16.5 (commencing with Section 38000) of the Vehicle Code.

(2) Any vessel numbered under Division 3.5 (commencing with Section 9840) of the Vehicle Code.

(3) Any manufactured home, mobilehome, commercial coach, truck camper, or floating home registered under Part 2 (commencing with Section 18000) of Division 13 of the Health and Safety Code.

(c) For the purposes of this part, the value of the following property shall be excluded in determining the value of the decedent’s property in this state:

(1) Any amounts due to the decedent for services in the Armed Forces of the United States.

(2) The amount, not exceeding fifteen thousand dollars ($15,000), of salary or other compensation, including compensation for unused vacation, owing to the decedent for personal services from any employment.

California Probate Code Section 13500:

Except as provided in this chapter, when a spouse dies intestate leaving property that passes to the surviving spouse under Section 6401, or dies testate and by his or her will devises all or a part of his or her property to the surviving spouse, the property passes to the survivor subject to the provisions of Chapter 2 (commencing with Section 13540) and Chapter 3 (commencing with Section 13550), and no administration is necessary.

The Small Estate Affidavit procedure can be very useful for collecting smaller assets, such as lingering bank accounts that a person forgot to re-title in the name of his or her trust. Often, the successor Trustee of the deceased person's trust will rely on this to collect assets that are rightfully considered part of the trust estate for ultimate distribution to the trust beneficiaries. 

If you own real estate outside of California, it is worth taking some extra steps to ensure that it will get distributed in accordance with your wishes at the time of your death. 

Use of Will

If you are using a Will as your primary estate planning document, check how the laws of the non-California state where you own property will affect your ability to transfer that asset at the time of your death.

Some areas of investigation include understanding what the probate process is like in the other state (i.e., how long does it take and how much will it cost?). You should also check to see whether the other state has its own inheritance or estate tax. Probate in California can be extremely expensive and time consuming, so for people owning California real estate (whether living in California or outside of California), it's especially important to engage in estate planning. 

Proper Signing

Even though someone may follow the proper rules in California when signing a Will, it's important to check that it also complies with the laws of the state where you own real estate. Doing so will minimize the likelihood that your Will will be considered invalid under the laws of the other state.

Distributing Assets

Owning real estate outside of California may mean that a lawyer in that state needs to be engaged to determine the proper steps to distribute your property after you pass away. It's a good idea to gain an understanding of the estimated cost of transferring your assets, as well as the potentially beneficial strategies to reduce the friction of the transaction (e.g., simplify the process, reduce costs, reduce delays).

Owning real estate outside of California introduces additional complexities to the estate planning process that can cause potential issues for beneficiaries. It's therefore important to get a handle on these challenges before something happens so that your beneficiaries are not met with unexpected difficulties.

With the world's population becoming increasingly mobile, it's not uncommon to create a Will while living in one state and then to move to California to reside.

California Probate Code Section 6113 provides:

A written will is validly executed if its execution complies with any of the following:

(a) The will is executed in compliance with Section 6110 or 6111 or Chapter 6 (commencing with Section 6200) (California statutory will) or Chapter 11 (commencing with Section 6380) (Uniform International Wills Act).

(b) The execution of the will complies with the law at the time of execution of the place where the will is executed.

(c) The execution of the will complies with the law of the place where at the time of execution or at the time of death the testator is domiciled, has a place of abode, or is a national.

Therefore, for purposes of California law, if a Will was executed while the deceased person lived outside of California, but complies with the laws of that state, then it will be valid under California law. 

Personal Property vs. Real Property

The disposition of a deceased person's personal property is governed by the laws of the state where the person was domiciled at the time of his or her death. Real property dispositions, on the other hand, are governed by the laws of the state where the real property is located. Thus for example, if a California resident died owning property in Florida, then a probate proceeding may need to be separately started in Florida for the purpose of distributing the deceased person's Florida property.

Jurisdictional issues can sometimes get confusing. For those moving into California, the validity of Wills created while living outside of California (so long as they follow the formalities of the other state) should not be an issue. However, for California residents who are contemplating moving to another state, it is important to obtain a review of your estate planning documents by a qualified estate planning lawyer in that state.