What is a "small estate set aside"?

If a deceased spouse's estate is worth less than $20,000, it may be set aside and distributed to the surviving spouse and/or minor children. The relevant law is California Probate Code Sections 6600 to 6615. The purpose is to provide assets to a surving spouse and minor children, even contrary to what a Will may say.

To make use of the small estate set aside law, however, the "net estate" cannot exceed $20,000.

What is the "net estate" and how do you calculate it?

A "net estate" is the value of the assets includable in the estate minus any liens or encumbrances on the assets. For example, if the only asset of the estate is a parcel of land worth $100,000, and it has a mortgage of $90,000, then the net estate would be $10,000.

The estate does not include non-probate assets such as life insurance, retirement accounts, joint tenant accounts, assets subject to a probate homestead, and real estate outside of California.

Because of the relatively small amount of the small estate set aside, it usually doesn't have a significant impact on a deceased spouse's Will. However, a court has discretion in allowing for a small estate set aside.

Thus, if you want to leave your estate to someone other than your surviving spouse or children:

  1. Make it clear in the Will
  2. Request that the disposition not be affected by the small estate set aside laws, and
  3. Clearly indicate assets have been provided for the surviving spouse and/or children outside of the probate estate.