Death and taxes, as they say, are the only givens in life. And yet, it is estimated that only 33 percent of Americans have estate plans in place to protect their assets and their loved ones. While most of us know the importance of an estate plan, many people simply don’t get around to it or just don’t want to think about their own mortality.
So what happens to your property when you die? Any property or assets you own at the time of your death are part of your estate. Probate is the process of administering your estate through the court system and distributing assets according to the legal documents you have executed in your estate plan. After you die, your assets will be transferred to your heirs through your will, any trust that you have funded, or through joint ownership or specified beneficiary wording. If you have made no provisions, however, the state determines how your estate will be distributed.
Last Will and Testament
A will is the primary legal instrument in an estate plan that ensures that your estate is distributed to your heirs in the way you choose. You will name an executor whose job is to administer your estate, pay debts and obligations, and distribute remaining assets according to your instructions.
While your will can benefit your family, it can also name others such as friends and charities. It will also name a legal guardian to any minor children. Any assets transferred under a will are subject to probate, meaning it will have to go through the state probate court system. Without a will, you are said to have died intestate, and each state has intestate succession laws that determine who will get these assets after your death.
Trusts are very versatile instruments that can be used to transfer assets after your death. There are many kinds of trusts that can be established for many different reasons.
Revocable trusts established during your life transfer assets to the trust that will be managed after your death by a trustee. Your trust will include provisions for asset distribution to beneficiaries after your death.
Assets held jointly or that have their own beneficiary provisions will also be transferred outside of probate. These include
- Proceeds from a life insurance policy
- Real property that is held with another person in joint tenancy or with the right of survivorship
- Funds in retirement accounts such as 401(k)s or IRAs
- Bank accounts and other assets that are held jointly or have transfer or payable-on-death clauses
Depending on the asset and instrument, the joint owner or beneficiary will have to satisfy specific requirements to get possession of the asset.
What if You Have Not Made Provisions for Asset Distribution Before Your Death?
If you die without a will in California, you will be considered dying intestate, and any assets left in your estate will be subject to the state’s intestate succession rules.
Under California Probate Code 6400-6455, intestate succession follows these guidelines:
- If you are married and have no children, your separately held property will go to your surviving spouse.
- If there is no will and you are not married but have children, your estate will go to your children. When there is more than one child, assets are distributed between children equally. If your child predeceases you, then your grandchildren will inherit your estate.
- If you are married and have children, your separate property will be distributed to both your spouse and children.
- If there is no spouse or children, assets go to other surviving relatives beginning with the closest relatives.
- If no spouse, children, or other family exists, assets will go to the state.
While this may work for some people, most people want to be able to designate who gets their estate and in what amounts. Dying intestate takes all the power of this choice away from you. Without a valid estate plan in place, you are handing all the control of your estate over to the state and the probate court.
Putting the Power in Your Hands in Orange County
At the Law Offices of Roshni T. Desai, our experienced Orange County estate attorneys help put the power back in your hands. We will look at your unique financial circumstances and help develop an estate plan that takes care of your loved ones and distributes your assets in the way you choose. Call us at (714) 694-1200 or contact us on our website online contact form to schedule a free consultation to discuss any of your estate planning needs.