I have had a few cases recently where a person, who has now died, had been the beneficiary of a trust. However, in all the cases the person who has now died never got their beneficial share from the trust before they died. So what happens? When does a trust beneficiary require a probate in California?
The basic threshold currently is $166,250 to avoid a full probate. So let’s say Mommy Mae dies with a living trust – the Mommy Mae Living Trust. For simplicity let’s say she has one son, Sam. If Mae dies with Sam as the beneficiary of her trust Sam generally needs to take the assets out of the trust. However, stuff happens. Sometimes Sam just doesn’t have a chance to remove the trust assets before they die. If Sam is receiving less than $166,250 then Sam’s heirs just need to do small estate affidavits to clear title to their interest in the trust.
However, if the amount is over $166,250 then a probate is going to generally be required. These are the cases I am focusing on here since I have seen so many of them in the last year or two. When a trust beneficiary dies before getting their inheritance out of the trust a probate may be required for them. Generally the trustee of the trust will not distribute the trust benefit until the probate is established for the deceased beneficiary.
Assuming the real estate in the trust is being sold (as is two different cases I am currently working on have) then you would list the assets in the probate as “personal property” and not “real property.” This is because the trust will distribute cash not real estate to the probate estate. Likewise when the inventory is done in the probate it would be listed as an attachment 1 item as “cash from Mommy Mae Trust” or similar to that. The probate referee will not be required if it’s just cash.
Another reason the probate might be needed for Sam is if his heirs need standing to enforce something in regards to the trust. For example if the trustee of the trust is taking improper action then Sam’s probate Administrator can bring a lawsuit, if needed, against the trustee of the trust.
In summary, just because mom or dad had a trust doesn’t mean their children will avoid probate if they die before the trust is distributed.
-John Palley
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