Estate Planning – Do I Need a Will …?
Most people know that a Will is a legal document that specifies the beneficiaries of your estate, what property will be passed on to them and the manner in which the property passes, but at some point will ask themselves do I need a Will …? In order to answer that question it is important to know what else, other than the obvious, a Will can do for you.
In a Will, you can choose a physical guardian for your minor children (a guardian of the person) and a guardian to manage their assets until that child turns 18 (a guardian of the estate). Oftentimes the guardian of the person and the estate will be one and the same.
It is not enough to make informal arrangements for someone to act as guardian of your children if you and your spouse die together in an accident. Nomination of a guardian needs to be in a written and properly executed document. The best way to do this is with a Will with a Will Based Estate Plan. In the absence of advance planning, the state of California will choose your child’s guardian, with preference usually given to a surviving parent and then family members, who may your last choice.
In a Will you can make an anatomical gift to a specific organization such as a medical school or research program. Upon your death it also puts your family on notice of what needs to be done with your body and to provide funds from your estate to cover any related expenses.
In a Will you may list specific gifts, including jewelry, mementos or money to pass to certain beneficiaries and direct what should be done with any property not otherwise provided for in your Will.
In a Will, you will also nominate an executor to collect and manage your assets, pay any debts, expenses and taxes that might be due, and then, with the court’s approval, distribute your assets to your beneficiaries according to the instructions in your Will.
It is never too early to start thinking about your Will.
No one is too young or too poor to need a Will. Accidents and the unexpected occurs regardless of age. If you feel your possessions are of little monetary value, keep in mind those photographs, high school yearbooks, keepsakes and other mementos may be of great sentimental value to your loved ones. By choosing who gets what in your Will you can make sure your mementos go to the right person and avoid disputes between divorced parents and other family members. On the other hand, you may have photographs; a personal journal or other items you want destroyed or discarded. With a Will you can choose what you want to happen to those items of property and who you want to handle them for you.
Some assets are not covered by a Will
When you ask yourself ‘do I need a Will?” you may also need to take a look at the type of assets owned and whether there are any beneficiary designations present. The instructions in your Will control the distribution of assets you own at death. However, those instructions do not control the distribution of community property, assets owned as joint tenants, and any other accounts with beneficiary designations and pay on death designations including proceeds from life insurance policies, retirement assets and investment accounts.
Assets with beneficiary designations are transferred to whomever is designated as a beneficiary in the “beneficiary designation” or “pay on death” forms you filled out regardless of who the beneficiaries in your Will are.
If you own property in joint tenancy with rights of survivorship, or as community property with rights of survivorship, the property passes to the survivor of the two of you upon your death and not pursuant to any instructions in your Will.
In California, assets acquired by you and your spouse or registered domestic partner from earnings while married or in a registered domestic partnership are community property. You and your spouse or registered domestic partner own equal shares of those assets. Your Will covers only your half of community property. Assets that either of you owned before your marriage or registered domestic partnership, and gifts or inheritances acquired after your marriage or registered domestic partnership, are usually, with some exceptions, separate property. The instructions in your Will will cover your separate property assets.
As a general rule assets held in a Trust are distributed according to the terms of the Trust regardless of the instructions in your Will and without any need for court supervision.
Your Will does not control distribution of property held in joint tenancy or subject to pay on death or beneficiary designations
Do I need a Will if all of my assets have beneficiary designations on them? Even if your entire estate consists of assets held in joint tenancy, a life insurance policy, a retirement plan or other accounts with beneficiary designations you should still have a Will to remove as much uncertainty as possible when the unforeseen occurs. By way of example what if your spouse or other beneficiaries die before you do? The assets held in joint tenancy or which are subject to beneficiary or a pay on death designations may end up being paid to your estate. If you do not have a Will, it will pass according to the laws of intestate succession, which may not be what you want. If you have minor children and you die, a Will lets you nominate guardians for your children. If you do not have a Will, the State of California decides who the guardians of your minor children will be, and again, that may not be what you want or what is best for your children.
Distribution of property when you die without a Will
If you are not married or in a registered domestic partnership, your assets will be distributed to your children or grandchildren, if you have any. If none, your assets will be distributed to your parents, sisters, brothers, nieces, nephews or other relatives depending upon who is still living at the time of your death. If none of your relatives out live you, your assets will go to the State of California.
If you are married or in a registered domestic partnership, and you die before your spouse or domestic partner, your relatives, including children from prior marriages may also be entitled to a significant portion of any property deemed to be your separate property. Non-spouses and non-registered domestic partners will receive nothing if you die without a will. If you and your deceased spouse have no living relatives, your estate will go to the state of California.
You can name your Trust as the beneficiary of your Will.
You can provide for some or all of your assets to be distributed to or “pour over” into a Trust upon your death. A Trust may, under appropriate circumstances also be a designated beneficiary of the proceeds from life insurance policies and retirement accounts.
Your Will can be changed or revoked at any time
Unless you have entered into a contract to the contrary, your Will can be changed at any time. As a general rule you should review and update your Will periodically when your circumstances or assets change so that if you die, your estate will be distributed in the manner you want it to. Marriage, divorce, the birth or adoption of a child and the death of beneficiaries are some but not all of the reasons you may need to update your Will. To change or update your Will you may choose to amend it with a properly drafted and executed Codicil, or have a completely new Will prepared, in which case you will want to specifically revoke all prior Wills and Codicils.
Moving to California from a different state does not necessarily require you have a new Will prepared
Do I need a Will if my Will was prepared in a different state? If your Will was valid under the laws of the State you had it prepared in, it will be honored in California but some of its provisions may be unenforceable. You should have an estate planning attorney review your Will to make sure there are no provisions in your Will which will be deemed invalid under California Law or in conflict with California community property laws.
After you die, your Will is enforced through the probate process
The provisions of your Will are carried out through a court-supervised process called Probate. As a general rule, when there is a Will in place, the filing of the Will with a Petition for Probate and appointment of the executor starts the process. Upon appointment of the executor, the executor then takes charge of your assets, pays your debts and, after receiving court approval, distributes the rest of your estate to your beneficiaries.
Simplified procedures are available for transferring assets to a spouse or registered domestic partner, or for handling estates with assets under $150,000.
Tell at least two people that you have a Will, where the original Will is and store duplicates in a separate location
You do not have to tell anyone what is in your Will. However, telling beneficiaries how your estate will be distributed can avoid conflicts and disputes between family members after your death. The decision is up to you. Regardless of what you decide, your executor and at least one other trusted persons should always know where your original Will is located. Your original Will should be kept in a safe and secure place of your choosing. As a further safeguard, duplicate original Wills should be stored in separate locations in the possession of a trusted person the event one is lost or destroyed.
If you are still asking yourself “do I need a Will” or want to explore a more comprehensive estate plan Contact us today to schedule your complementary consultation.
Priscilla A. Madrid is an Estate Planning, Elder Law Probate, Trust and Estate Litigation Attorney with over 25 years of experience serving clients in Anaheim Hills, CA and the surrounding Orange County areas.