New Rules for Small Estates Don’t Skip Estate Planning Under AB 2016
Did You Know? Did you know that Mount Everest actually isn’t the tallest mountain? It’s true! In honor of Opposite Day on Jan. 25, read on to explore three fun facts that might surprise you because they’re the opposite of what you might think! Mount Everest isn’t the tallest mountain from base to peak. While Everest is the highest point above sea level, Mauna Kea in Hawaii is taller when measured from its base on the ocean floor. Bananas don’t grow on trees. While they look like trees, bananas actually grow on large plants classified as giant herbs. Goldfish don’t have short memories. The old saying about goldfish having a three- second memory is false. They can remember things for weeks or even months!
More California families will be able to transfer assets to descendants without undergoing a lengthy — and often costly — probate process under a new state law. Assembly Bill 2016, which takes effect April 1, changes the definition of “small estates” by raising the probate threshold to $750,000, a massive leap from $184,500. While this new law does simplify the estate planning and administration process for many, it does not eliminate the need for estate planning. WHAT CALIFORNIA’S AB 2016 SAYS Estates falling under AB 2016’s new “small estates” threshold will now be exempt from the formal probate process, allowing assets to be transferred more quickly and with fewer legal hurdles. The bill also calls for a review of this threshold every three years to account for inflation and other economic factors. WHY EVEN SMALL ESTATES STILL NEED A PLAN Even with the expanded threshold, families with “small” estates need a strategic and formalized plan in place. For example, families with children who have special needs should not forego planning because they fall below the new threshold. Additionally, if you have minor children, estate planning is still crucial. Without a plan in place, the court will determine guardianship for your children and the assets they inherit, which may not align with your wishes. Managing assets for minors can also be complicated without the proper documents in place. WHAT AB 2016 MEANS FOR BUSINESS OWNERS Business succession planning should still be handled formally and strategically, regardless of whether your business assets fall under the $750,000 threshold or not. To ensure your business’s smooth transition, you still need to establish an entity, such as an LLC or corporation, and have a trust in place to manage the transfer of ownership. Without these critical documents executed, your business could face unnecessary financial repercussions, disputes, or even dissolution after you pass away. MANAGE YOUR ESTATE WITH CONFIDENCE Don’t let the expanded definition of “small estates” lull you into complacency. Comprehensive estate planning and having an effective Asset Protection Plan are still necessary to protect your loved ones, your assets, and your business. At Dahl Law Group, we provide effective legal counsel to guide you and your loved ones through the process of protecting your legacies, children, and businesses. Contact us today to discuss how we can help you plan with confidence, regardless of the size of your estate.
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