What’s a Small Estates Limit and Why Should I Care?

Estate plan­ning expert Liza Hanks explains how prop­erty worth less than the “small estates limit” can avoid a lengthy pro­bate court pro­ceed­ing after death.

Every State Has Its Own Small Estates Limit

Peo­ple often ask me if their estate is going to have to go through pro­bate after they die. If an estate is small enough, it won’t. Each state has its own small estates limit; the amount ranges from as much as $275,000 to just $10,000, depend­ing on the state. Estates worth less than the estab­lished amount don’t have to go through a for­mal pro­bate court pro­ceed­ing.

The small estates pro­ce­dure is often called a “sum­mary pro­bate.” To qual­ify, it does­n’t mat­ter whether the per­son made a will before they died. All that mat­ters is the value of the assets left behind. To claim the assets, you’ll file a sim­ple form or two and wait for a required period of time.

Claim­ing Prop­erty With an Affi­davit After Death

Some states make it even eas­ier to claim small amounts of prop­erty. Depend­ing on state rules, you may be able to use a sim­ple affi­davit. (An affi­davit is a state­ment you sign in front of a notary pub­lic, swear­ing that what you say in the state­ment is true.) All you do is wait a required period of time — usu­ally 30 or 45 days — then sign the affi­davit stat­ing that:

• you’re the legal inher­i­tor, and
• the prop­erty isn’t sub­ject to a pro­bate pro­ceed­ing in your state.

Is Your Estate Under the Small Estates Limit?

If you’re try­ing to fig­ure out whether an estate’s value is below your state’s small estates limit, the first thing to do is make a list of the prop­erty. On this list, include only the prop­erty that passes to heirs and ben­e­fi­cia­ries by will. If there’s no will, you’ll have to look to your state’s laws — called intes­tacy laws — that describe who inher­its if there is no will.

Don’t include prop­erty that passes out­side of a will, such as a retire­ment plan, prop­erty held in joint ten­ancy, payable-​on-​death (POD) bank accounts, real estate inher­ited by a transfer-​on-​death deed, or transfer-​on-​death bro­ker­age accounts. If a per­son had a life insur­ance pol­icy with a named ben­e­fi­ciary, then the insur­ance pro­ceeds won’t count either.

When deter­min­ing what counts and what does­n’t, state rules vary slightly. For exam­ple, some states count the fair mar­ket value of an asset like a house or a car, even if there’s an out­stand­ing loan or mort­gage. Other states deduct the amount of money owed to arrive at the asset’s value.

More Infor­ma­tion

To find your state’s small estate limit and to learn which prop­erty counts toward it, see What You Need to Know About Your State’s Small Estate Limit in Legal Con­sumer’s Inher­i­tance Law learn­ing cen­ter.

Liza Han­ks’s most recent book is Every Cal­i­for­ni­an’s Guide to Estate Plan­ning. To con­nect with her directly, visit www​.liza​hanks​.com.