Ask Liz Weston

Get smart with your money

Probate

Q&A: Do you need a new will when you move to another state?

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Dear Liz: I have a will, properly done by an attorney, in my home state of Texas. I’m thinking of moving to California. Will the state of California recognize and accept my will?

Answer: The short answer is yes, but you should consult a California attorney anyway.

California generally recognizes a will that was valid under the laws of the state where it was executed. But moving to another state can affect other aspects of your estate plan.

Probate in California — which is the court process that typically follows death — can be expensive and protracted. A will doesn’t avoid probate, but a living trust can. The two states also differ in how marital property is treated, even though both are community property states.

Two other documents you should have — a power of attorney for finances and an advanced healthcare directive — also would benefit from updating. These documents allow you to name trusted people to make decisions for you if you’re incapacitated. Having California-specific versions could make it easier for financial institutions and medical providers to accept them. Plus, it’s generally a good idea for the person making healthcare decisions to be physically nearby. That makes it easier for them to get to the hospital in an emergency, consult with doctors and see for themselves how you’re doing.

While you’re at it, take a look at your beneficiary designations for retirement plans, life insurance and other financial accounts. These designations typically override what your will or living trust says, so you’ll want to make sure to review and update those regularly.

As you may have read here before, estate planning is not a “one and done” chore. You should have an attorney review your documents every three to five years and after any major life event, including a move to a new state.

Q&A: Why living trusts are a good option, most of the time

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Dear Liz: My goal is to avoid probate and allow simplified access for my heir, who is also my executor. I have no family. I have chosen payable-on-death and transfer-on-death accounts instead of putting all financial assets in my trust, against the wishes of the attorney who drew up the trust for my condo. I am 79, with about a million in financial assets, with no debt or mortgage, and I am self-insured for long-term healthcare. Is the decision to use these accounts appropriate for me?

Answer: Please take the advice you paid for. The trust you have is probably a living trust, a flexible estate-planning device that avoids probate. Living trusts generally allow a smoother, more organized settlement of the estate than other probate-avoidance options.

The person who settles your estate is called your successor trustee and will perform much the same duties as an executor. But typically your successor trustee also can handle financial and other matters should you become incapacitated.

As covered in previous columns, payable-on-death and transfer-on-death accounts can be appropriate solutions for people with few assets who can’t afford to pay for a living trust. For more complex estates like yours, however, a living trust is the more appropriate option.

Q&A: The ins and outs of what counts for probate

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Dear Liz: The value of our car, furniture and personal items is well below the $185,000 that currently triggers probate in California. We no longer own real estate. Am I correct that investment and bank accounts that have designated beneficiaries do not count toward the probate limit?

Answer: Yes. (Your car doesn’t count either, by the way.)

Most states have simplified procedures for smaller estates. California’s limit, which is raised with inflation every three years, was set at $184,500 on April 1, 2022. What’s counted for probate purposes depends on state law, and California excludes cars, boats and mobile homes, as well as bank accounts owned by multiple people, property that transfers directly to a spouse and real estate outside California.

Other property that avoids probate includes life insurance proceeds, death benefits and accounts that have named beneficiaries. Real estate can avoid probate if it’s held in joint tenancy or is transferred using a transfer-on-death deed. Property in a living trust also avoids probate.

Thursday’s need-to-know money news

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Today’s top story: Probate workarounds can save your heirs time and money. Also in the news: Student loan refi rates keep dropping, which airline you should fly in 2020 (and beyond), and how to know if you should refinance your mortgage.

Probate Workarounds Can Save Your Heirs Time and Money
There are often workarounds to help get assets to heirs, but avoiding probate isn’t the right move for everyone.

Student Loan Refi Rates Keep Dropping, Should You Take the Plunge?
The advertised minimum fixed interest rate on refinanced student loans dropped to an average of 3.51% on July 1.

Ask a Points Nerd: Which Airline Should I Fly In 2020 (and Beyond)?
Flying has become a lot more complicated.

How to Know if You Should Refinance Your Mortgage
Mortgage rates continue to drop.

Probate workarounds can save heirs time, money

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A reader recently reached out after his elderly mother died, asking how soon he could distribute the $10,000 she had earmarked in her will for each of her two grandchildren.

Because she lived in California, I had to break the bad news: He won’t be able to hand over the money any time soon.

Probate is the court process to distribute someone’s estate after their death, even if there is a will, and is notoriously slow in California. A typical probate takes nine to 12 months, and court shutdowns related to COVID-19 mean the wait could be longer. Probate is also expensive in California: By law, an attorney could charge $11,000 in fees to handle the woman’s $400,000 estate.

In my latest for the Associated Press, what to keep in mind if you’re trying to decide whether to make the investment to spare your heirs the expense and hassle of probate.