When you don’t consider what will happen to your family if you die unexpectedly or become incapacitated, you will cause your family unnecessary financial and emotional hardship because you have not made your intentions clear. Courts will then have to decide who will care for your children and how to divide your estate. For example, in California Probate Court, when a person dies and the decedent did not have a will or an estate plan, the following (potentially unintended) scenarios can occur:
• The spouse gets 100% of the estate if the couple had no children
• The spouse and if only child each get 50%
• The spouse will share with more than one child (Spouse 1/3 and 2+ kids 2/3)
• The decedents parents get 100% if the decedent had no children or spouse
• Another relative gets the estate
• The State takes the decedent’s estate if there are no “takers”, i.e. relatives.
Items that are included in the “estate” are all assets that are in the decedent’s name alone. Accounts where the named beneficiary predeceased the decedent may require Probate; however, probate may be unnecessary if the assets are under $150,000.
The absolute basics: a handwritten will
A will still needs to be probated, but all people should at least have a will. A will allows the decedent to appoint an executor, waive a bond and the decedent also decides who gets what. With a will, a decedent can leave funds in trust for children and can also name guardians for them.
Probating a will can be costly – up to 8% of the estate. It will also be time consuming, taking anywhere from nine months to two years. The courts may also require a bond, although a will may waive it. When drafting a will, people must also be aware that it is far easier to object to a will than it is to object to a notarized Trust.
With that being said, everyone should at least have a handwritten will; without this, a court could very well award a decedent’s estate to an “intentionally long-lost” relative. A basic handwritten will can avoid a lot of heartache and financial distress for a decedent’s loved ones.
A basic will is easy to write and will make it easier for banks to hand over funds under a Probate Code section 13100 declaration. In its most basic format, a will should at least state:
“I, name, leave my entire estate to my spouse. My spouse shall act as my executor to serve without bond.”
A will can either be hand written, dated, and signed which is a holographic will. Or it can be typed, dated and then signed in front of at least 2 unrelated witnesses (self-proving will) to make it legally binding.
Best option: an Estate Plan
In order to give your family and loved ones as much security and as little heartache as possible, you will want more than a holographic or basic will; you should seriously consider a comprehensive Estate Plan that will also cover you if you should become incapacitated. Such a comprehensive Estate Plan should include the following documents:
• Power of Attorney – Financial
• Advanced Health Care Directive
• Assignment of Assets – General
• Marital Property Declaration
Trusts are separate entities from the decedent (this is when all or part of the of the Trust become irrevocable). Because the trust “owns” the assets and not the individual (decedent), there will be no probate; furthermore, if you establish a trust and become incapacitated, your affairs will be handled by the trusted next in line (successor Trustee).
Dying intestate or becoming incapacitated without having your estate and/or financial plans in place can be disastrous for you and your family. While a handwritten will can be easily made at home and may cover the most basic needs, the best plan will be to talk with your lawyer or consult with a financial advisor to come up with a comprehensive Estate Plan to ensure you and your loved ones will be taken care of in the event of death or incapacity.