What is a will? Your will is a legal document in which you describe instructions to be carried out after your death. You can direct the distribution of your assets (money & property), and give your choice of guardians for your dependents. It becomes irrevocable (unchangeable) when you die.
In your will, you can name:
1. Your beneficiaries –
2. A guardian for your minor children – a person responsible for your child’s personal care if you and your spouse die before the child turns 18. You may name your guardian, who may or may not be the same person, to be responsible for managing any assets given to the child, until he or she is 18 years of age.
3. An executor – an institution or person to collect and manage your assets, pay any debts, expenses and taxes due (on court approval) and distributed to beneficiaries according to the instructions on the will. Role has significant responsibilities and is time-consuming – choose the executor wisely.
Does a will cover everything I own? No. Your will affects only those assets that are titled in your name at your death. The following may not be affected by your will.
Assets owned as joint tenant with rights of survivorship
“Transfer on death” or “pay on death.”
“Community property with right of survivorship” – Married couples or registered domestic partners may hold title to their community property assets in their names as “community property with right of survivorship”. When the first spouse or domestic partner dies, the assets pass directly to the surviving spouse or partner without being affected by the will.
What happens if you don’t have a will? If you die without a will (you die intestate), California law will determine the beneficiaries of your estate.
Contrary to popular myth, if you die intestate everything is not kept by the state but the state may inherit your estate under certain situations. In California, those married or in a registered domestic partnership will have their community property assets passed to their spouse/registered domestic partner. They may also receive part of your separate property assets, with the rest going to your children, grandchildren, parents, sisters, brothers, nieces, nephews and other legal relatives.
If you are not married or in a legal partnership, your assets will be distributed to your closest relatives and if your partner dies before you, their relatives may also be entitled to some or all of your estate. Friends, a non-registered partner or your favorite charity will receive nothing unless you name them in a will.
If you die intestate and your deceased spouse/registered partner have no living relatives then your estate does go to the State of California.
What if my assets pass to a trust after my death? A will can provide that all assets be distributed to trust on your death. When trusts are created under a will, they are testamentary trusts. If you have a living trust (a trust established during your life) then your will is referred to as a pour over will. The purpose of such a will is to make sure that any assets not already in the name of your trust are transferred to your trust upon your death.
How is a will carried out? A will is managed by a court-supervised process called probate. The executor of a will needs to start the probate process by filing a petition in court seeking official appointment as executor. The executor can take charge of your assets, pay debts and, with court approval, distribute your estate to your beneficiaries.
Advantages of probate: Rules that are followed on dispute are defined and quickly executed.
The court reviews the executor’s handling of the estate protecting the beneficiaries’ interest
Disadvantages of probate: It is public – your words and the value of your assets are on public record.
Fees are usually higher because they are based on a statutory fee schedule which can be more than under a trust. It takes longer – usually 6 weeks for each court request
Who should know about your will? You will need to decide who should know about your will – the exact content will be (at minimum) known by your attorney and yourself. Your executor and close family should know how to access your documents but don’t need to know the details. Your original signed will, should be kept in a safe place (lawyer’s safe or a fireproof box).
*** THIS INFORMATION IS PROVIDED ONLY AS EDUCATION AND NOT AS LEGAL ADVICE ***
Edi Alvarez, CFP®
BS, BEd, MS