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CALIFORNIA PROBATE: THE WAY IN WHICH YOU TAKE TITLE AFFECTS HOW YOUR REAL ESTATE IS ADMINISTERED UPON YOUR DEATH

Posted by Lauren Rios | Sep 19, 2022

USE OF JOINT TENANCY TO AVOID PROBATE

A decedent's interest in joint tenancy property is not subject to probate administration. Joint tenancy is a good tool for smaller estates. The most common uses of joint tenancy for small estates have been for cash account (checking or savings accounts) and for residences. But joint tenancy is generally not recommended for larger estates or where homeowners wish to obtain a full "step-up" in cost basis upon the first joint tenant's death. 

USE OF COMMUNITY PROPERTY TO AVOID PROBATE

On the death of either spouse, one-half of the community property belongs to the surviving spouse. The other half is subject to the testamentary disposition of the decedent.

Prior to July 1, 1975, community property owned by a person dying prior to such date was subject to probate. In order to avoid this rule, estate planners advised owners of small estates to convert certain of their community property, such as their residence and savings accounts, to joint tenancy in order to avoid the probate of such assets. However, the present rule is that, except as provided in Probate Code Sections 13500–13506, when a spouse dies intestate leaving property that passes to the surviving spouse under Probate Code Section 6401 (intestate share of surviving spouse), or dies testate and by his or her will bequeaths or devises all or part of this or her property to the surviving spouse, the property passes to the survivor subject to the provisions of Probate Code Sections 13540–13554, and no administration is necessary.

Therefore, there is no advantage in converting community property into joint tenancy because both methods of holding title result in the avoidance of probate when the property is to pass to the surviving spouse. However, as stated above, the disadvantage of converting community property to joint tenancy is that this conversion results in a loss of the “stepped up” basis on both halves of the property at the death of one spouse.

TENANCY IN COMMON

When spouses hold property as tenants in common ("TIC"), their respective interests in the property are not community interests and therefore they each hold the interests as their separate property. Because all of a person's separate property is disposable by will, it follows that interests held as tenancies in common are disposable by will. Furthermore, anything disposable by will must be administered in probate, unless specifically excepted by law. There is no exception applicable to interests in tenancies in common; therefore these interests are subject to probate administration. This rule applies to non-spouse homeowners who hold property as tenants in common (e.g., siblings who own their real property interests as TIC).

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Lauren Rios

Attorney Lauren Rios established her law practice on the philosophy that everyday people deserve access to the exemplary services of a big firm, but with the personal touch of a smaller firm. This belief is reflected in her delivery provided to her clients throughout California.

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