Estate plans, which include a will and/or trusts, are designed so that your estate can be distributed without any assistance or guidance from the state. When you die without a will in California, the state takes over and it is often a messy and laborious process for those left behind.
Estates Without A Will Must Go Through California Probate Courts
First, the entirety of your estate goes into what is called a probate process. For details about probate, visit our post, Probate 101. In short, the probate process serves three main purposes:
- It takes inventory of – and tallies the value of – all properties, assets, financial accounts, owned by the deceased (referred to as the “decedent”).
- Pays all existing and continuing bills, debts, taxes, related probate fees, and any monies owed until the probate process is complete
- Distributes remaining assets according to the estate plan. If there is no estate plan in place, the estate moves through the probate court and the court distribute assets and properties following a very specific, probate standard that determines heirs/beneficiaries
The state will assign an executor (administrator) to facilitate the process. In most cases, it would be a spouse, member of the family, or a close family friend (more rarely and only with input from the family). If the family is in disagreement, the state will assign their own administrator to the case, and his/her fees are paid from the estate.
To minimize complications, reduce fees and potential penalties, and ease the probate process it is a good idea to hire a probate lawyer who takes over as the executor while also serving as sound legal counsel through the proceedings.
California Probate Follows Intestate Succession Laws
In order to make things as fair and equitable as possible, California and other states have created their own set of probate laws designed to distribute the deceased’s (decedent) assets in a specific order. These are called intestate succession laws, and there is almost no way to get around them.
So, let’s say you have a decent art collection and you plan on passing it to your niece, who is an art student. You’ve told her that on many occasions and she feels so honored to be the beneficiary of something she’s loved her whole life. Then, you die without a will, and the estate moves through intestate succession. Unless someone else in the family knows your wishes and supports them, or believes and wants to honor your niece’s claim, your art may wind up going to a child or sibling who could care less about the art and more about its value on the collector’s market.
Avoiding intestate succession is one of the most compelling reasons to create an estate plan. Go to our Ultimate Estate Planning Checklist to learn more about what the estate planning process entails.
Assets that Move Through Intestate Succession
Some assets may not need to move through intestate succession at all, like those that are co-owned/titled with someone else or financial accounts that have stated “pay on death (POD)” beneficiaries on record. Proceeds from life insurance policies are immune to intestate succession as are any properties or assets held in a trust.
The properties and assets that will move through probate and intestate succession include:
- Any financial accounts, retirement holdings, investments, securities, etc., that do not have named TODs, PODs, or beneficiaries listed, OR if all of the named beneficiaries are deceased
- Properties and vehicles that were owned solely in the name of the deceased person and acquired before a marriage took place (any properties or assets acquired during a marriage pass directly to a surviving spouse in the state of CA unless a will or other legal documents specifies otherwise)
- Shares of any properties or businesses held jointly with someone else (“tenants in common”), so if your deceased mother and a sibling owned property or business together – each with their own share(s) – your mother’s share would move through probate
Nolo.com has a very well-written description of the intestate succession process and what it means for all relevant heirs and beneficiaries.
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Pay careful attention to those divisions and you can see why dying without a will in California is a very complicated and frustrating experience for your heirs and beneficiaries.
It winds up requiring a tremendous amount of time and energy at an incredibly difficult emotional time in their lives. Inheriting halves or thirds of property means that individuals have to buy the other person out or work together to sell the property and then split the remaining equity after all of the real estate fees have been paid, and so on.
One of the best gifts we can give to our loved ones is to create legally sound wills and estate plans so probate remains out of the state’s hands and can be easily facilitated by the chosen trustee and an experienced estate attorney.
Is it time for you to write or update your will or trust? Schedule a consultation with Tseng Law Firm, one of the Bay Area’s most trusted estate attorneys.