California Executors Need to Understand the Difference Between Probate and Non-Probate Assets

The Law Firm of Kavesh, Minor & Otis, Inc. Can Help You Overcome the Challenges of Estate Administration

Serving as an executor or personal representative for a California estate is often an excellent way to honor a loved one’s legacy. However, taking an estate through probate is rarely easy. Estates, just like the lives they reflect, can be complicated. In many cases, simply accounting for all estate assets and determining which need to go through probate—and which don’t—can be time-consuming, physically exhausting, and emotionally overwhelming.

You don’t have to take on the stress of being an executor alone. Since 1981, The Law Firm of Kavesh, Minor & Otis, Inc. has helped California families keep probate as pain-free as possible. Our skilled attorneys discuss the types of assets you might need to manage as an executor and how to know the difference between probate and non-probate assets.

Understanding California Probate

In California, the term “probate” refers to the broad legal process of administering an estate. Probate procedures differ somewhat depending on whether the deceased person had an estate plan. Most probate cases fall under one of the following two categories:

• Formal probate. If the decedent passed away with a will but without a revocable living trust or other arrangement, their estate assets are distributed in accordance with their final wishes and under the supervision of the probate court.
• Intestate succession. People who die without any estate plan are said to have died “intestate.” In these cases, the probate court will appoint someone—often a surviving spouse or an adult child—to act as the estate’s representative, with heirs selected using a pre-determined legal formula.

In either case, the estate’s executor—sometimes referred to as the “personal representative”—must follow a series of specific and time-sensitive steps to initiate probate, pay creditors, and ensure that heirs receive their inheritances.

5 Basic Steps for California Estate Executors

An executor can be appointed through the terms of a last will and testament or by a probate court. While every probate case differs in its details, executors can typically expect to:

1. Submit a petition to open a probate case with a county probate court.
2. File a copy of the deceased person’s will with the court clerk, if any will existed.
3. Send notice of probate proceedings to any “interested parties,” including the decedent’s close relatives, heirs, and creditors.
4. Marshall, inventory, and manage the estate’s assets.

Formal probate and intestate succession both present their own challenges. Marshalling and inventorying estate assets, for instance, can be time-consuming—in part because many people never make a record of all their possessions and sometimes leave assets in storage units and safe deposit boxes that their surviving relatives may not know anything about.

The 2 Types of Assets in California

During estate administration, executors must inventory the estate’s assets and assess their value. However, not every estate asset must pass through probate. Instead, several different sections of the California Probate Code—the Golden State’s laws for estate planning and distribution—draw a distinction between assets that are subject to probate and assets that are exempt from it. In broad terms, most estate assets fall into one of these categories:

Probate Assets

An estate is everything that a deceased person owned before passing away, including real properties, motor vehicles, and the many items—great and small—that made their house a home. Of these assets, most that were individually owned by or titled to the decedent are subject to probate. Common examples of probate assets include:

• Real estate
• Motor vehicles
• Bank accounts
• Stock and brokerage accounts
• Art, jewelry, and collectibles
• Cryptocurrencies and other digital estate assets
• Intellectual property rights

Probate assets of significant value are typically detailed in the deceased person’s will and are usually assigned to specific heirs. However, even assets that the decedent did not think to include in their estate plan—like an old sofa or kitchen appliances—may still be subject to the authority of a California probate court.

Non-Probate Assets

A non-probate asset is any asset that is legally and necessarily exempt from probate. These may be exempt for a variety of reasons. However, in most cases, non-probate assets involve some form of in-built protection or preexisting arrangement that authorizes an immediate transfer to an already-named heir—like a bank account with a “payable-on-death” designation or a life insurance policy with a specified beneficiary.

The most common types of non-probate assets include:

• Real properties held with rights of survivorship, such as a home jointly owned by a married couple or otherwise occupied in joint tenancy
• Any assets transferred and titled to a revocable living trust, irrevocable living trust, or other form of trust
• Any accounts that have payable-on-death beneficiary designations
• Retirement accounts, such as an IRA or 401(k), that have named and living beneficiaries
• Life insurance policies with named and living beneficiaries

Preparing for Probate: What to Expect From Estate Administration

Since many executors enjoyed a close relationship with the decedent before their passing, serving as a personal representative for an estate is often considered a great honor. However, while acting as an executor undoubtedly demonstrates your commitment to a loved one’s legacy, administering an estate not only takes a great deal of time and work, it could expose you to liability, including the risk of serious financial loss.

In California, and in most other states, executors are classified as a type of “fiduciary.” All fiduciaries, including executors, have a formal and legally enforceable obligation to advocate for the best interests of whichever party they represent. This obligation is termed fiduciary duty and could cause even minor mistakes to have unexpected and outsized consequences. 

Since executors have a fiduciary duty to the estate, they must be forward-thinking and have a thorough understanding of California’s expectations for probate. These expectations include:

• Initiating probate claims promptly and in the correct court
• Managing complex estate assets, even when that means taking temporary control of a rental property or overseeing stock trading portfolios
• Reviewing creditor claims, denying those without merit, and ensuring that any valid and outstanding debts are paid by the estate
• Resolving disputes among and between beneficiaries—an especially difficult task for executors who are related to other heirs and don’t wish to harm their relationships
• Defending the estate from legal challenges, including probate contests and other types of lawsuits

How the Law Firm of Kavesh, Minor & Otis, Inc. Could Help You Administer an Estate

For many executors, even those committed to their position, the responsibilities of administering an estate can quickly prove overwhelming. After all, trying to juggle so many different demands—meeting strict filing deadlines, inventorying assets, and mediating disputes within the family—is not always compatible with the demands of a full-time job or having to regularly travel to another county or state for court proceedings. 

However, you do not have to bear the burden of probate all by yourself. The Law Firm of Kavesh, Minor & Otis, Inc. has spent more than 40 years helping Los Angeles and Orange County executors honor their loved ones’ legacies. Our experienced team of probate attorneys could help you negotiate an already-trying time by:

Keeping Probate as Quick and Pain-Free as Possible

If your loved one created an estate plan before passing away, it may already contain provisions meant to keep their most prized possessions out of probate. Our attorneys could help you review the terms of critical estate planning documents and legally binding property contracts, including:

• A last will and testament
• A revocable living trust
• Community property agreements and joint tenancy arrangements
• Beneficiary designations

Depending on the details of the estate plan, you could find that your role as executor leaves you with far too much responsibility to take on alone.

Managing Complex Estate Assets Responsibly

The task of marshalling and managing estate assets can be borderline herculean, sometimes taking weeks or even months of nonstop work to complete. However, the Law Firm of Kavesh, Minor & Otis, Inc. has spent decades working with California probate courts and California estate representatives. We could:

• Track down hard-to-find assets
• Assess and appraise jewelry, artwork, and collectibles
• Ensure that banks, brokerages, and other financial institutions transfer and re-title the decedent’s accounts as quickly as possible
• Manage complex assets, including stock portfolios and other interest-bearing assets

Resolving Estate Debts

An estate’s debts must be paid before heirs can receive their inheritances, but not all debts are equally valid. Our probate lawyers could help you preserve an estate’s solvency and financial integrity by:

• Assessing creditor claims and ensuring that only valid debts are paid
• Protecting heirs and other beneficiaries from predatory creditors who try to offload the decedent’s medical bills onto surviving family members
• Filing the decedent’s last tax returns and calculating how much—if anything—is payable to the federal government

Ensuring Your Loved One’s Assets Remain Safe From Any Threats

Creditors, disinherited heirs, and feuding relatives sometimes contest the validity or terms of a will. If a lawsuit is filed against the estate, it is the executor’s responsibility to resolve it.

Fortunately, executors still have a right to experienced counsel, and the Law Firm of Kavesh, Minor & Otis, Inc. has decades of experience litigating, fighting, and defending estates from probate contests.

Honoring an Heir’s Right to a Timely Inheritance

Before a probate case can be closed, heirs must receive their inheritances. Distributing certain types of assets is easy, but others—such as a home or family business—can be much more difficult. Our attorneys can examine the terms of an estate plan and work to ensure that heirs receive their share of an estate quickly and efficiently.