| Frequently Asked Questions about Wills |
These Frequently Asked Questions are provided by the California State Bar Association, Estate Planning, Trusts & Probate Law Section.
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1. |
WHAT DOES A WILL DO? | |
A will is a legal document,
drafted and executed in accordance with state law, which becomes irrevocable at
your death. In your will, you can name: - YOUR
BENEFICIARIES.
These are family members, friends, or charitable organizations
who will receive your assets as you direct. You may provide for specific gifts
of such items as jewelry or a specific sum of money to named beneficiaries. You
should also provide for the distribution of the "residue" of your estate -- that
is, your remaining assets (which do not need to be specified) which are not specifically
given to individuals or organizations in your will. - A
GUARDIAN FOR YOUR MINOR CHILDREN.
You may nominate a person who will have
the responsibility to care for a child of yours if you and your spouse die before
the child attains 18 years of age. You may also name a guardian -- who may or
may not be the same person -- to be responsible for management of assets given
to a minor child, until the child attains 18 years of age. - AN
EXECUTOR.
This person or institution of your choice, named in your will
and appointed by the probate court, collects and manages your assets, pays your
debts and expenses and any taxes that might be due, and then, in a manner approved
by the court, distributes your assets to your beneficiaries in accordance with
the provisions of your will. Your executor plays a very important role with significant
responsibilities. It can be a time-consuming job. You should choose your executor
carefully. A will is a part of your "estate plan." To provide you with more information,
the State Bar has published a I pamphlet entitled "Do
I Need Estate Planning?" You may obtain a free copy of the pamphlet by
sending a stamped, self-addressed envelope with your request to the address listed
below.
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2.
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DOES A WILL COVER EVERYTHING I OWN? | |
No. Generally speaking,
your will affects only those assets which are in your name alone at your death.
Some assets which are not affected by your will include: - LIFE
INSURANCE. The cash proceeds from an insurance policy on your life are paid
to whomever you have designated as beneficiary of the policy in a form filed with
the insurance company -- no matter who the beneficiaries under your will may be.
- RETIREMENT
PLANS. Assets held in retirement plans, such as a 401 (k) or an IRA, are transferred
to whomever you have named as beneficiary in the plan documents.
- ASSETS
OWNED AS A JOINT TENANT. Assets such as real estate, automobiles, bank accounts
and other property held in joint tenancy will pass to the surviving joint tenant
upon your death, not in accordance with any directions in your will.
- "TRANSFER
ON DEATH" OR "PAY ON DEATH". Some bank accounts and security
accounts may be held with a beneficiary designation such as "transfer on death"
("TOD"). Other assets, such as U.S. savings bonds, may be held in a form directing
those assets to be "paid on death" ("POD") to a named beneficiary. These
assets will pass pursuant to those directions, and not pursuant to your will.
- LIVING
TRUSTS. Assets held in a revocable living trust at your death are distributed
pursuant to the provisions of that trust document. A living trust allows for the
management of your assets during your lifetime and the transfer of those assets
pursuant to the terms of the trust without a court-supervised probate proceeding.
The State Bar has published a pamphlet entitled "Do I Need
a Living Trust?" which provides more detailed information about living
trusts. You may obtain a free copy of the pamphlet by sending a stamped, self-addressed
envelope with your request to the address listed below.
- YOUR
SPOUSE'S HALF OF COMMUNITY PROPERTY. In California, any assets acquired by
you and your spouse from earnings during your marriage are community property.
You and your spouse own equal shares of those assets. Your will, therefore, affects
only your half of the community property, not your spouse's. Assets that either
spouse owned at the date of the marriage, together with gifts and inheritances
given to just one spouse during the marriage, are that spouse's separate property.
Your will affects all of your separate property held in your name alone.
Even
if your entire estate consists of property held in joint tenancy, a life insurance
policy and a retirement plan, you should still consider making a will. If the
other joint tenant dies before you do, then the property held in joint tenancy
will be in your name alone and subject to your will. If named beneficiaries die
before you do, the assets subject to a beneficiary designation may be payable
to your estate. You may unexpectedly be entitled to a bonus, a prize, a refund,
or may receive an unexpected inheritance which would then be subject to your will
as well. If you have minor children, the nomination of a guardian of their person
and estate is a very important reason for making a will.
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3. |
WHAT HAPPENS IF I DON'T HAVE A WILL? | |
If you die without a will
(that is, "intestate"), California law will determine the beneficiaries of your
estate. Contrary to popular myth, if you die without a will, everything does not
automatically go to the state. If you are married, your spouse receives all of
your community property. Your spouse will receive part of your separate property,
and the rest of your separate property will be distributed to your children or
grandchildren, parents, sisters, brothers, nieces, nephews or other close relatives.
If you are not
married, your assets will be distributed to your children or grandchildren, if
you have any -- or to your parents, sisters, brothers, nieces, nephews or other
close relatives. Friends or a favorite charity will receive nothing if you have
no relatives and die without a will. In that case, the State of California is
the beneficiary of your estate. | |
4.
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ARE THERE VARIOUS KINDS OF WILLS? | |
Yes. In California you
can make a will in one of three ways: - A
HANDWRITTEN OR HOLOGRAPHIC WILL. This will must be completely in your own
handwriting. You must date and sign the will. Your handwriting has to be legible,
and the will must clearly state what you are leaving and to whom. A handwritten
will does not have to be notarized or witnessed. Even so, having the will signed
by two witnesses is a good idea. It is also a good idea to retain a qualified
lawyer to check the will to be sure that it conforms with California law and is
clear with respect to your intentions and directions.
- A
STATUTORY WILL. California law provides for a "fill-in-the-blanks" will form.
The will form is designed for single, married and divorced people with relatively
small estates. If there is anything you do not understand or if you are making
any provisions which are complicated or unusual, you should ask a qualified lawyer
to advise you.
- A
WILL PREPARED BY A LAWYER. A qualified estate planning lawyer can provide
you with the assurance that your will is prepared in accordance with California
law. The lawyer can also offer suggestions and help you understand the many ways
that property can be transferred to or for the benefit of your beneficiaries.
A lawyer can also help you develop a complete estate plan and offer alternative
plans which may save taxes. This kind of planning can be extremely helpful and
economical in the long run for you and your beneficiaries. Your lawyer will either
personally supervise the signing of your will or will provide you with detailed
instructions concerning the rules for its execution by you and two witnesses who
are not beneficiaries of your estate.
No
matter what kind of will you use, the will should be solely your will and not
a "joint will" with your spouse or any other person. |
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5. |
WHAT IF MY ASSETS PASS TO A TRUST AFTER MY DEATH? |
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You may make provision in your will for a trust to be created after your death
and funded with assets held in your estate. When trusts are created under a will,
they are known as "testamentary trusts." With an appropriate beneficiary
designation, testamentary trusts can even be beneficiaries of life insurance policies.
If you have a
living trust, then your will is often referred to as a "pour over" will.
That will provides that any assets held in your name at your death and not in
your living trust will be added to the trust, to be held, administered and distributed
in accordance with its terms. For
beneficiaries who are minors, you may also consider providing for transfers from
your estate to a custodian under the California Uniform Transfers to Minors Act. |
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6. |
CAN I CHANGE MY WILL?? | |
Yes. You should review
your will periodically because, if it is not up to date when you die, your estate
may not be distributed as you wish. Your
will can be changed through a "codicil," which is a legal document which must
be drafted and executed in accordance with the same state laws which apply to
wills. A "codicil" is simply an amendment to your will. Your will must not be
changed by crossing out words or sentences or making any notes or written corrections
on it. You should seek the advice of a lawyer and make a new will when you marry
or divorce. You should also review your will )when there are any major changes
in your family (such as births and deaths), when the value of your J assets significantly
increases or decreases, and when it is no longer appropriate for the persons named
as guardian or executor or testamentary trustee to act in that capacity.
If you have moved to California from another state and have a will which is valid
under the laws of that state. California will honor its validity. It is important
for you to review your will with a qualified California lawyer, however, since
California law will govern the probate of your will if you reside here at your
death. If you move to another state, your California will should be reviewed by
a lawyer there. | |
7.
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HOW ARE THE PROVISIONS OF MY WILL CARRIED OUT? | |
The process by which the
provisions in your will are carried out following your death is known as "probate."
Probate is the
court-supervised process developed under California law which has as its goal
the transfer of your assets at your death to the beneficiaries set forth in your
will, and in the manner prescribed by your will. It also provides for the relatively
quick determination of the validity of any claims by creditors against your assets
at your death. At the beginning of a probate administration, a petition is filed
with the court, usually by the person or institution named in your will as executor.
After notice is given, and a hearing is held, your will is admitted to probate
and an executor is appointed. If
your will provides that assets shall pass to your surviving spouse at your death,
then those assets can be transferred to your surviving spouse through the filing
in the probate court of a "spousal property petition," which is a simpler and
less expensive procedure than a formal probate administration. If the assets in
your name alone at your death do not include an interest in real estate and have
a total value of less than $100,000, then generally the beneficiaries under your
will may follow a statutory procedure to effect the transfer of those assets pursuant
to your will, subject to your debts and expenses, without involving the probate
court. A probate
has advantages and disadvantages. The probate court is accustomed to resolving
disputes about the distribution of your assets in a relatively expeditious fashion
and in accordance with defined rules. In addition, you are assured that the actions
and accountings of your executor will be reviewed and approved by the probate
court. Disadvantages
of a probate include its public nature; the provisions of your will and the value
of your assets become a public record. Also, because lawyer's fees and executor's
commissions are based upon a statutory fee schedule, the expenses may be greater
than the expenses incurred by a comparable estate managed and distributed under
a living trust. Time can also be a factor; often distributions to beneficiaries
can be made pursuant to a living trust more quickly than in a probate proceeding. |
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8. |
WHO SHOULD KNOW ABOUT MY WILL? | |
Other than the lawyer who
writes a will for you, no one needs to know what your will says. But the location
of your original will should be known by your executor and other close friends
or relatives. Your will should be kept in a safe place such as your safe deposit
box, your lawyer's safe, or a locked, fireproof box at your residence. |
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9. |
WILL MY BENEFICIARIES HAVE TO PAY ESTATE TAXES? | |
Assets that are transferred
to either your spouse (if he or she is a U.S. citizen) or to charitable organizations
are not subject to estate taxes. Assets passing to other individuals will be taxed
if the net value of those assets -- in 1999 -- is $650,000 or more. Under current
law, that amount will increase, in uneven increments, to $1,000,000 in 2006. For
estates which approach or exceed this value, significant estate taxes can be saved
by proper estate planning. That planning must usually be accomplished before death
and, in the case of married couples, before the death of the first spouse. While
estate planning generally focuses upon estate taxes, planning must , it also take
into consideration income, gift, property and generation-skipping taxes as well.
Qualified advice about taxes should be obtained during the estate planning process.
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10. |
WHAT OTHER PLANNING SHOULD I DO? | |
LIST OF ASSETS AND DEBTS.
Making a list
of your assets and keeping it in a place known to your executor or other family
members is of great help to them when you are not able to share that information
with them. List your bank accounts, safe deposit boxes, stocks and bonds, real
estate, and other assets. Also list the names and addresses of anyone to whom
you owe money. DURABLE
POWER OF ATTORNEY FOR PROPERTY MANAGEMENT. In
this document, you appoint another individual (the "attorney-in-fact") to make
property management decisions on your behalf if you are incapacitated. The attorney-in-fact
manages your assets and must do so in a prudent manner accountable to you and
solely in your best interests. DURABLE
POWER OF ATTORNEY FOR HEALTH CARE. This
document allows the person named as attorney-in-fact to make health care decisions
for you when you can no longer make them for yourself. It may also contain statements
of wishes concerning such matters as life sustaining treatment and other health
care issues, and instructions concerning organ donation, disposition of remains
and your funeral. | |
The
purpose of this pamphlet is to provide general information on the law, which is
subject to change. If you have a specific legal problem, you may wish to consult
a lawyer. This pamphlet was made possible, in part, through the volunteer efforts
of the Estate
Planning, Trust and Probate Law Section
The State Bar of California
180
Howard Street
San Francisco, CA 94105-1639 For
information on how to order multiple copies of this pamphlet, see: State
Bar of California Consumer Pamphlets. Estate
Planning, Trust & Probate Law Section |
Provided By - Richard H. Hallstrom, Esq.
For
Plan-My-Estate.com
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