Before shifting my practice from estate planning to estate litigation, I witnessed up close the challenges and frustrations associated with the California probate process. That has changed for many Californians. Assembly Bill 2016 went into effect on April 1, raising the threshold on the value of primary residences that can bypass the full probate process to $750,000.
This is a substantial increase from the previous limit of $184,500 set in 2019, meaning many more primary residences are eligible for the simplified petition process. Compared to the full probate process, the streamlined procedures will involve fewer court appearances and less paperwork, will decrease costs and shorten the time it takes to distribute assets to heirs.
Still, and I will say this more than once, having an estate plan is vastly superior to probate when it comes to transferring assets to your family after your death.
Impact of AB 2016
The estimated number of people who will be able to take advantage of this change is considerable. The median price of a home in California is between $774,000 and $788,000, according to Zillow and Redfin, respectively. The latest data from the U.S. Census Bureau indicates there are approximately 14.8 million housing units in California, of which about 56% are owner-occupied. This means that roughly 8.2 million homes are owned by their occupants in the state. An estimated 40% of homes are within the AB 2016 threshold. If 40% of just the owner-occupied homes fall within the threshold, that means 3.28 million would potentially be in line for the simplified process.
This is good news because the formal probate process is notoriously lengthy, expensive, and frustrating.
A Lengthy Process Avoided
Generally, probate takes about 18 months, which is a long time for families who are counting on assets from an estate. This is not because there is a lot of work involved, but because court dockets are congested, and phases of the process simply take time.
After you file a petition, for example, it might be heard in two months, and if your petition is granted at the first hearing (instead of being continued to another hearing in two months, which is common), it can take another month to get an order. Then there is a creditors’ claim period, which adds another four months. This period allows creditors to formally submit their claim against the estate. The executor of the estate is then responsible for reviewing and paying valid debts. After that you file the final petition, which again would be heard in two to three months. The turnaround on the subsequent order is another month or so.
People often get frustrated with this timeline, so it helps to educate them about the reality of the process and coach them to set their expectations accordingly. Clients should know that while attorneys will try to expedite the process, there are phases of probate that attorneys simply cannot make go any faster.
In fact, the quickest I have ever managed to complete probate was one year, and that was really pushing it. But with the simplified process made available to more people by AB 2016, the turnaround time will be a fraction of that experienced by those forced into the full process.
Again, that is partly because of congested court dockets. While AB 2016 will help alleviate the burden on the courts to some extent, probate courts are still going to be busy. AB 2016 will have the greatest impact on courts in areas where homes fall under the new value threshold.
A Costly Process Avoided
Why will AB 2016 have a significant impact on the cost of probate? People who qualify will only have the cost of one petition versus the thousands of dollars in costs required throughout the probate process.
What people will be most excited about is that – for qualifying residences – they will not have to pay attorney fees.
The attorney fees are set by the Probate Code and are based on the value of estate; they do not change if an estate is more or less complicated. This alleviates a chief concern about probate, that the estate will be diminished by expenses incurred during the process.
Fees and expenses can undermine the beneficiaries’ ability to keep the house left to them. AB 2016 is designed to take that pressure off the beneficiaries. Otherwise, attorney fees can be as much as $12,000, plus filing fees, publication fees, probate referee fees, and other costs that can eat away at the estate’s value.
Given 2025 home values, it is important to understand that not everyone’s home will qualify. That’s the nature of California real estate. The best probate avoidance plan is to set up an estate plan with a will and a trust. Most importantly, it will help heirs keep the house if that is what they want to do.
Also important is that the law specifically targets primary residences, meaning other types of real property, like rental or commercial properties, do not qualify for this simplified process.
Non-primary real estate and other assets (e.g., bank accounts, investments) still need to go through the traditional probate process unless they fall under the existing small estate affidavit threshold of $184,500. For these other assets, the existing probate procedures remain in place.
Better Yet: A Genuine Estate Plan
Take a lesson from people I have counseled. Clients who have gone through probate do not want to experience it again, nor do they want to put their children through it.
Transferring assets is infinitely simpler with a trust. You file with the county an affidavit and the deed to change the title, all of which can be done within a couple of months.
While AB 2016 is good news for people who do not have an estate plan, I still highly recommend creating a living trust to help avoid probate court entirely. A comprehensive estate plan can be specifically tailored to meet both the client’s needs as well as their family’s.
Bottom line: If you don’t have an estate plan and your home value is less than $750,000, the simple version of probate will benefit your family when you are gone. But if you really want to do them a favor, talk to an estate planner and set up a trust. They will thank you.
Takeaways
- Assembly Bill 2016 amends the Probate Code to allow for a primary residence property valued under $750,000 to bypass the full probate process, simplifying the probate procedure for many Californians.
- The simplified probate process reduces court appearances and paperwork, which decreases costs and distributes assets from primary residences to heirs faster.
- The full probate process typically takes about 18 months, while the simplified version will significantly reduce this timeline.
- AB 2016 targets primary residences and does not apply to other real estate, like rental or commercial properties, which still require traditional probate procedures.
- Despite the benefits of AB 2016, creating a comprehensive estate plan with a trust and a will is recommended to avoid probate entirely and ensure a smooth transfer of all types of property.
