While the debate continues about which is better to have, a will or a trust, it is essential to understand just how important it is to have a will at the very least. Believe it or not, 55% of Americans do not have any estate plan, let alone a will. And of those who do have a will, wealthy Americans are more likely to not have updated theirs, joining over 70% of Americans whose wills are out-of-date.
Why is a Will so important?
A will is essentially a legal document that formalizes the wishes of its creator concerning the distribution of the estate, the care of minor children and the creation of trusts, either for the children or to minimize estate taxes. A will does not go into effect until after the death of the testator, and the probate court oversees that its provisions are carried out through the appointment of a personal representative.
Most people are motivated to create a will for several reasons. Through a will they name a legal guardian for their minor children and spell out how the assets they leave for the children will be managed. They may choose a trusted friend, spouse or relative as the personal representative of the estate, who will make sure bequests, property and assets are distributed properly to named beneficiaries, and the estate’s debts and taxes settled.
Without a will, the state will appoint an executor to determine how the estate’s assets are distributed based on each state’s intestate succession laws, with court costs being deducted from the estate. Unfortunately, any minor children could become wards of the state unless a family friend or relative petitions the court for guardianship.
Why set up a Will in California?
California has a streamlined administration for smaller estates that saves on court costs and time. Estates valued at less than $150,000 and even larger estates that transfer assets out of the estate through trusts, POD designations and spousal rights to survivorship, can take advantage of this simplified administration. If the spouse is the only surviving beneficiary, there is a Spousal Community Property Form which simplifies administration.
Without a will, the estate will still go through probate in an intestate process that determines the intestate succession as directed by state law. Intestate succession laws in California favor close relatives and are quite rigid, which often leads to squabbles among surviving relatives.
As your personal and financial needs are unique, it is best to seek experienced legal guidance in the San Diego area when setting up a will that will both clearly express your wishes and be properly executed.