Settling a decedent’s estate can involve multiple approaches and even multiple estates, due to the nature of the decedent’s assets involved and how such assets are variously titled. Each asset is considered on its own terms. Each estate is separately administered.

Depending on whether a decedent had effective and complete estate planning, the administration of the multiple assets and estates may be more complex and the outcome may not be the optimal result.

The primary estate planning tools include wills, trusts, joint tenancy, and designated death beneficiary forms. Some involve administration and some do not. Administration means that a fiduciary (appointed legal representative) – such as an executor or trustee – controls and manages the assets of an estate so that all debts, expenses, and legal obligations of the estate are satisfied. Probates are court supervised administrations, whereas trusts are private administrations, usually without court involvement.

It is possible to have assets cascade from one decedent’s estate to another decedent’s estate, each separately administered. Each decedent’s estate is answerable to the estate’s own creditors, tax debts and legal obligations.

Joint tenancy assets and death beneficiary accounts (e.g., pay on death and transfer on death accounts) do not require administration. These assets are claimed directly by the beneficiary and are usually owned outright free of trust.

Retirement accounts, life insurance policies and annuities require death beneficiary designations to be made prior to the owner’s death. Like joint tenancy assets, death beneficiary accounts avoid trust and probate administration, if there is a living death beneficiary to inherit. If some portion of the asset does not go to a surviving beneficiary then such portion passes under the decedent’s will or laws of intestate succession to the heirs.

Real estate, investment accounts and bank accounts typically belong inside a trust for administration upon the settlor’s (owner’s) incapacity or death. Trust owned assets are part of the decedent’s trust estate and are separate from the decedent’s estate; that is, those assets owned individually or as joint tenancy by the decedent. Assets inside a trust avoid probate.

Wills say who inherits what assets and who administers the decedent’s probate estate (e.g, assets other than those discussed above). Wills may require probate administration or a spousal property petition to administer those assets. In California, a probate is required when assets in the decedent’s estate exceed the small estate threshold, currently $208,850. Assets in a small estate typically are claimed using the affidavit procedure without court administration.

Everybody should have a will, even if they also have a trust. Decedents typically own at least some assets outside of the trust that are neither death beneficiary accounts nor joint tenancy assets. Moreover, a decedent may have additional assets come into their estate from another decedent’s estate or from a lawsuit.

Without a will, such estate owned assets pass under the laws of intestate succession (according to the Probate Code) to the decedent’s heirs. Under intestacy, depending on who survives the decedent, the heirs may either be the surviving spouse and children, if any, or else may even be more remote family members (e.g., aunts/uncles, nieces/nephews or even cousins).

Inheritances can either be distributed outright to the beneficiaries or be held and administered in further trust– such as a special needs trust, a support trust, or a house trust – or, in the case of a minor, be held and administered in a custodial account. The terms of such continued trusts or custodial accounts may be found in the decedent’s revocable trust, will or in a standalone trust for such purpose.

Estate planning should contemplate the foregoing considerations. It is best to avoid leaving assets in scenarios where they cascade into another decedent’s estate. Most estate planning, however, aims only to avoid a probate of that person’s own estate and not usually to avoid triggering another probate in a deceased beneficiary’s estate.

The foregoing brief discussion is not legal advice. For legal guidance consult a qualified attorney. Dennis A. Fordham, attorney, is a State Bar-Certified Specialist in estate planning, probate and trust law. His office is at 870 S. Main St., Lakeport, Calif. He can be reached at Dennis@DennisFordhamLaw.com and 707-263-3235.