On September 21st, Governor Newsom signed AB 2016 which drastically changes Section 13100 (and accompanying sections) of the California Probate Code. Specifically, California changed its law to allow a decedent’s primary residence to be distributed without going through the longer, more arduous probate process – if that property is valued under $750,000.
This is huge – A substantial portion of California’s estates going through probate presently and in the past have been because the decedent owned a property that was not in a trust – often valued under $750,000.
Before we go through California’s new requirements for a Petition to distribute Real Property under $750k, keep these 3 things in mind:
- This law does not go into effect until April of 2025, meaning that anyone who passes away with property under $750k in California that is not in a trust, must still go through probate.
- AB 2016 still requires beneficiaries and heirs to go to Court. Instead, Assembly Bill 2016 creates an avenue for properties under $750k to be distributed with only one Court Petition and Hearing Date.
- Because the new probate law allows for property to be distributed outside of the formal probate process, those properties will no longer be subject to the fee structure outlined for Administrators/Executors and their attorneys. This may save Californian’s money, but it may not.
California’s New Probate Law for the Transfer of Real Property after Death dictates that to meet the new criteria, the Petition needs to prove the following:
(b) The court may make an order under this section only if the court makes all of the following determinations:
(1) The gross value of the real property that was the decedent’s primary residence in this state does not exceed seven hundred fifty thousand dollars ($750,000), as adjusted periodically in accordance with Section 890.
(2) Not less than 40 days have elapsed since the death of the decedent.
(3) Whichever of the following is appropriate:
(A) No proceeding is being or has been conducted in this state for administration of the decedent’s estate.
(B) The decedent’s personal representative has consented in writing to use of the procedure provided by this chapter.
(4) The property described in the order is property of the decedent passing to the petitioner.
California’s Judicial Council Form DE-310 (Petition to Determine Succession to Real Property) is currently used for the transfer of properties under $184,500 and may also be applicable under this new law (once it is updated). Similar to the Petition to Determine Succession, the new law dictates that the value of the property will be determined by a Court Appointed Probate Referee:
(c) If the petition has attached an inventory and appraisal that satisfies the requirements of subdivision (b) of Section 13152, the determination required by paragraph (1) of subdivision (b) of this section shall be made on the basis of the verified petition and the attached inventory and appraisal, unless evidence is offered by a person opposing the petition that the gross value of the real property that was the decedent’s primary residence in this state exceeds seven hundred fifty thousand dollars ($750,000), as adjusted periodically in accordance with Section 890.
So, this means that with the new law, the first step is to get the Probate Referee to complete an Inventory and Appraisal ( CA DE 160) and then file the Petition with the supporting I+A.
What if there are other probatable assets in the estate, aside from the primary residence?
It appears that if there are other probatable assets, you can still remove the primary residence under $750K if the Personal Representative (Administrator/Executor) agrees to it:
13150. The procedure provided by this chapter may be used only if one of the following requirements is satisfied:
(a) No proceeding is being or has been conducted in this state for administration of the decedent’s estate.
(b) (1) The decedent’s personal representative consents in writing to use of the procedure provided by this chapter to determine that real property that was the decedent’s primary residence is property passing to the petitioners.
This means that under (b)(1), the primary residence could essentially be “sliced” out of a probate. That allows Administrator and Attorney statutory fees to be reduced, because the fees for administering a probate estate are determined by the total value of the estate. If an administrator requires legal assistance with distribution of the primary residence, those fees would be separate and determined on a case to case basis, which may or may not save the estate money.
Assembly Bill 2016 also allows for the $750,000 valuation to go up over time, and sets forth the following requirements for who must be notified of the Petition:
SEC. 4. Section 13151 of the Probate Code is amended to read:
13151. (a) If a decedent dies leaving real property that was their primary residence in this state and the gross value of that real property does not exceed seven hundred fifty thousand dollars ($750,000), as adjusted periodically in accordance with Section 890, and 40 days have elapsed since the death of the decedent, the successor of the decedent to an interest in that real property, without procuring letters of administration or awaiting the probate of the will, may file a petition in the superior court of the county in which the estate of the decedent may be administered requesting a court order determining that the petitioner has succeeded to that real property.
(b) A successor who files a petition pursuant to subdivision (a) shall deliver a notice of the petition to each heir and devisee named in the petition pursuant to paragraph (7) of subdivision (a) of Section 13152 within five business days of filing the petition.
“Successor of the decedent” is the person with standing. Cal CCP 377.11 defines successor in interest:
California Code, Code of Civil Procedure – CCP § 377.11
For the purposes of this chapter, “decedent’s successor in interest” means the beneficiary of the decedent’s estate or other successor in interest who succeeds to a cause of action or to a particular item of the property that is the subject of a cause of action.
This is where the litigation could arise if there is any question as to who is the “beneficiary of the decedent’s estate,” thus determining who is the “successor in interest.” That remains to be seen.
Lastly, the key date is April 1, 2025. This kicks into effect then and stays in effect until March 31, 2028, after which the $750K probate threshold increases:
(3) If the decedent dies on or after April 1, 2025, through March 31, 2028, the dollar amount for paragraph (2) of subdivision (a) is seven hundred fifty thousand dollars ($750,000).
(4) If the decedent dies on or after April 1, 2028, the dollar amount for paragraph (2) of subdivision (a) is the adjusted dollar amount, published in accordance with subdivision (c) of Section 890, in effect on the date of the decedent’s death.
What are the potential advantages of CA’s new Probate Law for Transfer of Real Property upon Death?
- AB 2016 may save some Californians time and money by avoiding multiple court filing fees and reducing attorney fees below the current statutory requirements.
- AB 2016 may avoid the need for multiple court hearings to distribute real properties under $750,000, thus freeing up the often clogged Courts and reducing costs for the Court.
What are the potential problems with California’s new probate law, AB 2016?
The question we’ll look at in another article is – will AB 2016 simplify the transfer process for Californians and Courts, or will it create more litigation between beneficiaries?
For questions about probating an estate in California or transferring real property upon death, contact our Northern California Probate Law Firm for a consultation.