What happens if I don’t make a will?
The State of California will distribute any assets you may have according to certain laws. This may or may not be what you want. For example, assets left to minors will have to be taken care of by a guardian, and since you don’t have a will, you didn’t name someone. And when your child/beneficiary turns 18, they have unlimited access to the funds you have left, since you didn’t leave it restricted in any way.
If you are married, all community and quasi community property will go to your spouse.
All separate property will go to your spouse if there are no children, parent, and brother, sister or children of a deceased brother or sister.
If there is one child, then half of the separate property will go to the spouse and half to that child. If that one child has died, then the half of the separate property will go equally to that one child’s issue (descendants).
If there are two or more children, then the spouse would receive 1/3 and the balance split between the children, or the issue of the children. (If one child was left, and deceased child had children, then split with them, or if no children left, but children of deceased children, split between them.)
If property does not go to the surviving spouse, it goes to the children equally, or if no s surviving children, then to their children equally if of the same degree of kinship.
If no surviving spouse, and no children or issue surviving, then to the parents of the person. If no parents survive, then to the issue of the parents equally, if of the same degree of kinship. Then grandparents, then grandparents issue. Then to predeceased spouse’s issue if of the same degree of kinship, then to the next of kin, etc.
Why do I need powers of attorney?
Powers of attorney are really for you during your life. If you ever become incapacitated and need someone to take care of you, it will be much easier for them if you have planned ahead and given this trusted person or persons a durable power of attorney to act for you. (A durable power of attorney is effective even if you are incapacitated. A regular power of attorney expires when you become incapacitated.)
Powers of attorney can be specific, e.g. a particular person to do a particular act for you, or broad e.g. a person to act for you in all financial or health related matters. This person must be someone you trust completely, as they will have access to your healthcare information and will make decisions for your care and finances because you cannot care for yourself.
You can tell your agent with your power of attorney what you want to spend your money on when you are alive, and how your healthcare decisions should be made, and you can put these wishes in writing so your agent and other family members will know what you wanted.
Why would I want a trust?
In California, a funded trust can help your estate avoid probate. It will also allow your successor trustee, if you are incapacitated, to manage the assets in your trust. Probate is expensive, and takes a long time because it requires court oversight. A trust is managed privately, although you may require the trustee to post bond, or give periodic accountings to the beneficiaries. Trusted individuals, professional fiduciaries or corporate trustees can help you when you are no longer willing or able to manage the assets in your trust. However, you have to transfer your assets into your trust before it can be managed by your successor trustee. An unfunded trust does not allow management because there is nothing in the trust to manage.
I advise people to review their documents every three to five years, or if your personal situation changes, or the situation of the persons you have named to help you have changed. Birth, death, divorce or estrangement, changes in health, tax codes, or your wishes change over time, and your trust and estate plan need to change as well.