Can I Distribute Assets Before Probate Closes

As an estate planning attorney and CPA with over 35 years of experience here in Escondido, I’ve seen far too many estates needlessly complicated by premature distributions. Just last week, Walter was named executor of his mother’s estate, a fairly straightforward case with a house, some brokerage accounts, and a modest life insurance policy. Eager to “get things done,” Walter started writing checks to himself and his siblings before the court formally approved the inventory and creditor claims. Big mistake. It turned out a previously unknown creditor surfaced, and suddenly Walter was personally liable for the shortfall – a painful lesson costing him over $12,000 in legal fees and personal funds.

The question of distributing assets before probate closes is a common one, and the answer is almost always: proceed with extreme caution. While it might seem efficient to start getting things settled quickly, doing so exposes executors to significant personal liability. Probate isn’t simply a formality; it’s a court-supervised process designed to protect both the estate’s assets and potential creditors.

The primary risk stems from the fact that until the probate court confirms the inventory of assets and allows claims against the estate, you don’t definitively know what funds are truly available for distribution. Distributing assets before this confirmation is essentially spending money you haven’t yet proven the estate legally owns, free and clear of debts. Creditors have a statutory right to be paid, and if the estate doesn’t have sufficient funds after distributions, the executor can be held personally responsible for the remaining balance.

However, there are limited circumstances where distributions can be made before full probate closure. One such instance is for necessary expenses. Reasonable costs associated with preserving the estate – like property taxes, insurance, and essential repairs – are generally permissible. Another limited exception involves court-ordered advances for specific purposes. If a beneficiary requires funds for immediate needs, you can petition the court for an advance, subject to judicial oversight.

And crucially, understanding the small estate procedures can offer significant shortcuts. For deaths on or after April 1, 2025, executors may avoid full probate for personal property under $208,850. Notably, AB 2016 now allows a simplified ‘Petition to Determine Succession’ for a primary residence valued up to $750,000. Per Probate Code § 13050, you MUST exclude all California-registered vehicles and up to $20,875 in unpaid salary from the small estate calculation. This can streamline the process considerably, but even then, careful record-keeping and adherence to statutory requirements are essential.

As a CPA as well as an attorney, I always advise clients to consider the tax implications of early distributions. While the estate itself doesn’t pay income tax (income is passed through to beneficiaries), distributions of appreciated assets can trigger capital gains tax for the recipients. Proper valuation at the time of distribution is critical. Furthermore, the “step-up” in basis afforded to inherited assets is lost if distributions aren’t handled correctly. This means beneficiaries will pay capital gains on a larger portion of the asset’s future appreciation. This is especially important with real estate, where Proposition 19 complicates transfer rules. Under Proposition 19, heirs only keep a parent’s low property tax base if they move into the home as their primary residence within one year. For transfers between Feb 16, 2025, and Feb 15, 2027, the tax-free ‘value boost’ is capped at $1,044,586 over the original taxable value; any value above this adjusted limit triggers a partial reassessment.

Finally, remember that the rules regarding digital assets are increasingly complex. Under California RUFADAA (Probate Code § 870), executors are legally barred from accessing ‘content’ (emails, private messages, crypto-keys) unless the decedent provided explicit ‘prior consent’ in their Will or Trust. Generic ‘all power’ clauses are legally insufficient for digital content access. This adds another layer of complexity to the distribution process, especially if the estate includes significant digital holdings.

How do probate courts in California evaluate intent when a will is challenged?

In California, a last will and testament operates within a probate system that emphasizes intent, clarity, and procedural compliance. When properly drafted, a will does more than distribute property—it creates legally enforceable instructions that guide courts, fiduciaries, and beneficiaries through administration with fewer disputes and less uncertainty.

For California residents, understanding how intent, authority, and compliance interact is one of the most effective ways to protect family harmony and estate integrity. A will that anticipates probate scrutiny is far more likely to be honored as written and far less likely to become the source of unnecessary conflict.

Official Legal Standards and Resources for California Executors

• Mandatory Judicial Forms:
  Judicial Council of California – Probate Forms (DE Series)
  The official repository for all “Decedents’ Estates” forms; in 2026, this includes mandatory updated forms for the $208,850 Small Estate threshold and the new AB 2016 simplified petitions for primary residences valued under $750,000.
• Riverside County Local Rules:
  Riverside Superior Court – Executor FAQ
  A localized resource for Riverside County fiduciaries that outlines 2026 requirements for mandatory e-filing, Local Rule 7010 for remote appearances, and specific duties regarding the 4-month creditor claim period.
• Federal Tax Compliance:
  IRS Guidelines for Executors (Form 706 & 1041)
  The authoritative federal guide for filing a final 1040 and the estate’s 1041; it reflects the 2026 OBBBA update, which established a permanent $15 million individual estate tax exemption, effectively ending the previous “tax cliff” uncertainty.
• Statutory Duty of Care:
  California Probate Code § 9600 (The Prudent Person Rule)
  Codifies the “Prudent Person Rule,” stipulating that an executor must manage estate assets with reasonable care and skill; it remains the primary legal standard in 2026 for determining if a fiduciary is liable for mismanagement or “surcharge.”
• Digital Asset Authority:
  Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA)
  Access California Probate Code §§ 870-884, which governs an executor’s power to manage online accounts; it clarifies why service providers can legally block access to private emails and crypto-wallets without explicit “prior consent” in the estate plan.