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BACK TO ESTATE PLANNING
DO I NEED A WILL?
WHAT CAN A WILL DO FOR ME ? A Last Will and Testament (“WILL”) is a way of ensuring that your property goes to certain people or organizations when you pass away. It also can be part of your overall “Estate Plan.” With a Will, you can name:
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Your Beneficiaries. The family members, friends or organizations that will inherit your “estate.” Your estate is made up of furniture, jewelry, stocks, bank accounts, cars, a business, real estate or anything else that you own.
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A Guardian. This person will take care of your children in case you and your spouse pass away when your children are minors. The Guardian will raise your children and manage their money.
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An Executor. This person or institution collects your property, pays your debts and any taxes that are due, and then makes sure that the rest of your estate is given to your beneficiaries.
DOES A WILL COVER EVERYTHING I OWN ? No. Some property is not covered by a Will. These include:
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Life Insurance. Money from your life insurance policy goes to the people you name as beneficiaries on the policy – no matter who is listed as an heir in your Will.
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Retirement Plans. Money from your retirement plan goes to the person(s) you name as beneficiaries in the plan.
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Property owned as a joint tenant. If you own real estate, cars, bank accounts and other property with another person as joint tenants your co-owner will inherit your share.
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Living Trust. All property you place in a Living Trust during your lifetime goes to the Trust’s beneficiary. A Living Trust is a way of managing your funds and investments during your lifetime and transferring them to a beneficiary after your death.
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Your Spouse’s half of Community Property. In California, any money, California real estate, and possessions that you and your spouse acquire during your marriage are called “Community Property.” You and your spouse own equal shares of this property, no matter who earns the most. So, your Will can include only your half of the community property, not your spouse’s.
Possessions and property that either spouse brought into the marriage - plus gifts and inheritances given to just one spouse during the marriage – are called Separate Property.
Even if your entire estate consists of a life insurance policy, a retirement plan and joint tenancies, you still should consider making a Will. For example, if you win a lottery or inherit jewelry from a friend, your Will would cover such unexpected additions to your estate.
WHAT HAPPENS IF I DON’T HAVE A WILL ? If you die without a Will, California State laws determine who gets your estate. If you are married, your spouse receives all your Community Property. Part of your Separate Property goes to your spouse, and part goes to your children or grandchildren, parents, siblings, nieces, nephews, or other close relatives.
If you are not married, your estate goes to your children or grandchildren, if you have any – or to your parents, siblings, nieces, nephews or other close relatives.
If you have no living relatives, the State of California gets everything you own. People who are not relatives won’t inherit anything if you pass away without a Will. So, your friends, former spouse or favorite charity won’t get a thing. Also, a surviving partner of an unmarried couple does not inherit anything.
DOES A WILL KEEP MY ESTATE OUT OF PROBATE COURT ? No. Making a Will is not away to avoid “Probate” – the court procedure that changes the legal ownership of your property after you pass away.
Your Will is filed with the County Court after you pass away. The court’s probate department makes sure it is your last valid Will, appoints the Executor named in your Will, and supervises the Executor’s work. If someone challenges your Will, a probate judge decides if that person should inherit any of your property.
Your estate avoids probate only if:
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You left your entire estate to your spouse, or
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Your estate is worth no more than $60,000.00 after your spouse’s share is paid, or
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Your property is held in joint tenancy with another person, or is all payable to a named beneficiary (such as the beneficiary listed on your life insurance policy), or
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During your lifetime, you put everything you own into a Living Trust, so that you own no more than $60,000.00 in your name at the time of your death.
WHAT KIND OF WILL SHOULD I HAVE ? In California, you can make a Will in one of three (3) ways:
- Holographic Will: Must be completely handwritten, signed and dated by you. Your handwriting must be legible, and the Will must explain clearly what you are leaving to whom. Remember, your family, friends and a probate judge must be able to understand your exact wishes. This type of Will need not be notarized or witnessed.
Even so, having the Will signed by witnesses is a good idea. Since probate laws are very specific, it is good to have an attorney check the Will to be sure that everything is done correctly.
Fill-in-the Form Will: This kind of Will is designed for single, married, and divorced people with modest estates. It will help you leave your estate to your children or spouse, and lets you give money to one other person or charity, and you can name a Guardian and Executor.
- Will prepared by an Attorney: An attorney can help you to understand the many ways that you can leave your property to beneficiaries. An attorney can also help you develop a complete Estate Plan and explain the tax consequences. This kind of planning can save time and money for your heirs.
To ensure the authenticity of this kind of Will, at least two (2) people who will not inherit from you must see you sign a typed or printed Will, and they must sign your Will, too.
No matter what kind of will you decide to have, keep in mind that you and your spouse should each have separate Wills.
MAY I CHANGE MY WILL ? Yes. In fact, if your Will isn’t up-t-date when you die, important people in your life may not be provided for.
You may change your Will through a “Codicil,” a legal paper that becomes an addition to your Will, or by writing a new Will. Do not change your Will by crossing things out and writing or typing changes on it, as doing so does not legally change your will.
A Codicil can be used to make fairly simple changes, such as naming a different Executor or naming a different beneficiary. Codicils must be written and witnessed in the same ways that Wills are.
You should think about making an entirely new Will when:
- you marry or divorce (once you divorce, your ex-spouse will not get any of your estate unless you say so in a new Will);
- there is a birth or death in your family;
- your property greatly increases or decreases in value; or
- the person you name as Guardian or Executor moves away, or passes away.
Also, if you move to another State, check with a lawyer there to see if your California Will is still valid.
WHO SHOULD KNOW ABOUT MY WILL ? Besides the attorney who writes your Will, no one needs to know about your Will. But your Executor and other close friends or relatives should know that you have a Will. And, whether you keep the Will in a safe deposit box, your lawyer’s safe, or a fireproof box at home, they should now where to find your Will when you pass away. Also, if you add a Codicil to your Will, be sure to store it with your Will.
WILL MY HEIRS HAVE TO PAY ESTATE TAXES ? Property that you leave to your spouse is not subject to federal estate tax, ands your remaining estate will not be taxed if it is worth less than $60,000.00.
WHAT OTHER PLANNING SHOULD I DO ? You can do several things now to help your Executor and family later on:
- Property List. Make a list of your property and where it can be found. Name your bank accounts, safety deposit boxes, stocks and bonds, real estate and other possessions. Also write down the names and addresses of your creditors – the people and companies to whom you own money.
- Instructions for Burial /Cremation/Organ Donation. Let your heirs know in writing how you want if you want to be buried, cremated, or if you want to donate organs to a hospital. Also tell them where you wish to be buried, or how you wish your cremains to be disposed of. Be sure to tell your Executor and family about these papers and where you keep them.
- Life Support Preferences. Someday you may be seriously ill and unable to let your family and doctors know what kind of medical treatment you would like. For example, if you were in a coma, would you want doctors to use life support systems to keep you alive?
In California, you can use a legal form, called a “DURABLE POWER OF ATTORNEY FOR HEALTH CARE DECISIONS” to name a friend or relative to make medical decisions for you, if you are ever unable to do so yourself. Once completed, the person you named and your doctor must follow your wishes.
For more information about Wills and Estate Planning, contact the firm.
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