Wills

What is a will?

A will is a document that lays out your wishes regarding the who-gets-what. It is the distribution of your assets, your real, and perhaps imaginary, property and all your personal stuff. This who-gets-what also includes information for the care of any minor children.

Why should I get a will?

If you pass away without a will, your family may not carry out your wishes. In fact, the state of California may not even carry out your wishes. Without a will, you are leaving your estate completely in the hands of an elected legislature that has decided what will happen to your stuff. Your heirs may then be obligated to spend additional time, money, and emotional energy figuring out your estate after you become incapacitated or pass away.

This is called settling your affairs and you probably don’t want the state of California settling your estate for you.

Wills can vary in their effectiveness, depending on the type, and no document can resolve every issue that arises after your death. But without a will, you are leaving all decisions up to the government.

Do I really need a will?

Some people think only the wealthy or those with complicated assets (useful or valuable things) need wills. However, there very good reasons to have a will.

By having a will, you can be clear about the who-where-what-when-why for your assets. You can keep your assets out of the hands of people you don't want to have them (like an estranged relative). You can identify who should care for your children.

Without a will, the court decides everything. With a will, your heirs will have a faster and easier time getting access to your assets, you can plan to save your estate money on taxes, and you can give gifts and charitable donations.

Instead ask yourself, why shouldn’t I get a will? Still need more convincing?

If I get a trust, do I need a will?

A will is useful even if you have a trust. As discussed in the section on trusts, a trust is an estate planning tool if you're concerned with providing for one or more beneficiaries for an extended time, such as minor children, someone with special needs, or even someone who is just not very responsible with money so you don't want them to receive a windfall all at once.

Most trusts deal only with specific assets, such as life insurance or a piece of property, rather than the sum total of your holdings. You might also consider setting up a trust as a way to provide for a beneficiary who is underage. Once the beneficiary is deemed capable of managing their assets, they will receive possession of the trust. Even if you have what's known as a revocable living trust into which you can put the bulk of your assets, you still need what's known as a pour-over will.

What is a pour-over will?

A pour-over will a type of will used in conjunction with a trust. Instead of governing the distribution of all your assets, a pour-over will provide that any asset that has not been put into (funded) your trust should be put into the trust after you pass away. Functionally, it names your already existing trust, not specific individuals, as the beneficiary of any assets you own that have not already been put into the trust. It pours everything from the will, into the trust. These assets do not pass directly to a living beneficiary through some other means.

Probate issues

One of the benefits of having a living trust is that the trust helps avoid probate of your assets with which they've been funded. Unfortunately, any of your property that isn't funded into your trust before you die will require probate. Your property will pass to your heirs according to California state law if you neglect to fund it into your trust, don't create a pour-over will, or don't have any other will in place directing where those assets should go. These are called laws of "intestate succession.”

Hopefully, you won't need your pour-over will. It should be there in a worst-case scenario, but it won't have to go into effect if all your property has been transferred into your living trust at the time of your death.

What happens if I don't have a will?

If you pass away with out a will, which is call intestate, the state of California will oversee the distribution of your assets, which it will typically distribute according to a set formula. The formula often results in half of your estate going to your spouse and the other half going to your children. Such a scenario sometimes results in the sale of the family home or other assets, which can negatively affect a surviving spouse who may have been counting on the bulk of your assets to maintain his or her standard of living.

Further complications may ensue if your children are minors, as the court will appoint a representative to look after their interests. Dying intestate may have tax consequences since a properly prepared will can reduce the estate tax liability.

As of 2020, a U.S. estate tax return must be filed on individual estates valued at $11,580,000 or more. No federal estate tax is due if the estate is worth less than that amount.

For further information, contact our firm for a free consultation.