Starting April 1, 2025, California will implement new probate exemption thresholds under Assembly Bill 2016 (AB 2016). This legislation significantly increases the exemption amounts for certain estates, allowing more families to avoid formal probate. Notably, AB 2016 introduces a new exemption for estates that include a decedent’s primary residence valued at under $750,000. These changes reflect the state’s effort to simplify the transfer of assets and reduce the burden of probate for smaller and mid-sized estates.
In this post, we’ll walk through the details of Probate Exemption Amounts in California Under AB 2016, explain the updated exemption amounts, and discuss how these changes can benefit California residents and their families. In April of 2025 the Judicial Counsel will formally come out the new amount that qualifies for a small estate Affidavit. Currently, that amount is $184,500 which is adjusted for inflation every 3 years.
Key Changes Under AB 2016
AB 2016 introduces two major changes to California’s probate process:
1. Increase in the Small Estate Exemption: Estates with a total value under $200,000 (this is the projected number after the $162,500 is adjusted for inflation) can now use simplified procedures to avoid probate.
2. New Exemption for Primary Residences Valued Under $750,000: A new exemption allows estates with a primary residence valued at less than $750,000 to bypass probate, even if the total estate value exceeds the $200,000 estimated limit.
These updates reflect rising property values and the need to streamline estate administration for more families.
1. Increased Small Estate Exemption: $200,000 Threshold
The small estate exemption allows certain estates to bypass formal probate by using a simplified affidavit process. Prior to AB 2016, only estates valued under $184,500 qualified for this exemption. Starting April 2025, the threshold will increase to an estimated $200,000.
How It Works: Beneficiaries of estates under the $200,000 in total value can use a small estate affidavit to claim assets, such as bank accounts and personal property, without opening a formal probate case.
What Counts Toward the Limit: Only assets subject to probate count toward the $200,000 limit. Assets that bypass probate—such as those held in a living trust, jointly owned property, or accounts with designated beneficiaries—are excluded from the total value calculation.
Example: If a decedent’s estate consists of a $150,000 savings account and a $40,000 vehicle, beneficiaries can use the small estate affidavit process to claim these assets, avoiding the probate court altogether.
Benefits of the Increased Small Estate Exemption
Reduced Probate Costs: By avoiding probate, beneficiaries save on legal fees, court costs, and executor fees.
Faster Access to Assets: The small estate affidavit process is much quicker than formal probate, allowing beneficiaries to access assets within weeks rather than months.
Less Court Involvement: This streamlined process reduces the burden on California’s probate courts, allowing them to focus on more complex cases.
2. New Primary Residence Exemption: $750,000 Threshold
One of the most impactful changes under AB 2016 is the new exemption for a decedent’s primary residence valued at less than $750,000. This change allows families to avoid probate for their primary home, even if the total value of the estate exceeds $200,000.
How It Works: If the decedent’s estate includes a primary residence valued under $750,000, the home can be transferred to beneficiaries without probate. This exemption is particularly valuable for families whose main asset is the family home.
Conditions for the Exemption: This exemption applies only to the decedent’s primary residence, meaning the home they lived in as their main residence before passing.
Example: If a decedent’s estate includes a primary residence valued at $700,000 and additional assets valued at $200,000, the home can be transferred to beneficiaries without probate under the new exemption. This allows the entire estate to bypass probate, despite the total value exceeding $200,000.
Benefits of the Primary Residence Exemption
Avoids Lengthy Probate for Family Homes: Many families rely on the family home as their primary asset, and this exemption allows them to retain ownership quickly without enduring the probate process.
Preserves Wealth for Heirs: By avoiding probate, the estate retains more of its value, as beneficiaries avoid court costs and legal fees.
Simplifies Real Property Transfers: Transferring a home can be complicated and lengthy during probate. This exemption makes it easier to complete the transfer, allowing heirs to take ownership and use the property sooner.
Practical Implications of AB 2016 for Estate Planning
The new probate exemptions introduced by AB 2016 provide valuable opportunities for California residents to streamline their estate planning. Here’s how families can take advantage of the updated exemptions:
1. Update Your Estate Plan to Reflect the New Exemptions
If your estate plan hasn’t been reviewed recently, now is a good time to revisit it. With the increased small estate and primary residence exemptions, you may be able to avoid probate without the need for more complex tools like a living trust.
Living Trusts Still Valuable for Large Estates: While the new thresholds are beneficial, those with estates over $200,000 (excluding a primary residence valued under $750,000) may still consider a living trust to avoid probate for other assets.
Keep Beneficiary Designations Updated: Assets like life insurance policies, retirement accounts, and payable-on-death accounts bypass probate if you name a beneficiary. Ensure these designations are current to avoid probate for these assets.
2. Consider Using the Small Estate Affidavit
For estates under $200,000, a small estate affidavit allows heirs to transfer ownership of bank accounts, personal property, and other qualifying assets without going through probate. This tool is useful for families who wish to avoid probate on smaller estates.
Eligibility and Process: This affidavit is straightforward, requiring beneficiaries to provide a simple statement and proof of death to the institution holding the assets.
3. Make Use of the Primary Residence Exemption
If the primary residence is the most valuable part of your estate, you may no longer need to rely on a trust to avoid probate for your home, thanks to the new $750,000 exemption.
• Home Transfer to Beneficiaries: With the exemption, families can keep the family home in the family without probate, preserving it for future generations and saving on probate-related expenses.
Limitations of the New Exemption Amounts
While the changes under AB 2016 are beneficial, there are some limitations to be aware of:
Only the Primary Residence Qualifies: The $750,000 exemption applies only to a decedent’s primary residence. Additional real property (such as rental properties or vacation homes) will still be subject to probate if the total estate value exceeds $200,000.
Exclusion of Non-Probate Assets: Only assets that are subject to probate count toward the $200,000 limit. This can be advantageous, as jointly owned assets, assets held in trust, or accounts with payable-on-death designations are excluded from this limit.
Larger Estates Still Require Planning: Estates that exceed the $200,000 threshold (and do not qualify under the primary residence exemption) still require traditional probate or estate planning strategies, such as trusts, to avoid probate.
Conclusion
The new probate exemptions under AB 2016, effective April 1, 2025, provide California residents with greater flexibility and options for managing their estates. With the increase in the small estate exemption to $200,000 and the introduction of a $750,000 exemption for primary residences, many families can now avoid the lengthy and costly probate process.
Contact Us for Legal Help
These changes underscore the importance of estate planning, even for small to mid-sized estates. By understanding the new exemptions and how they apply to your estate, you can protect your assets, save on probate costs, and ensure a smooth transfer of wealth to your loved ones. If you’re unsure how these changes impact your estate plan, Contact the top-rated California trust and probate attorneys Moravec, Varga & Mooney – today to schedule a telephonic consultation. Have questions, call (626) 460-1763 or email LV@MoravecsLaw.com.
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