What is a Will?

 In Blog, Estate Planning Archives

Should You Rely on One or Not?

What is a will? Should we be relying on wills? Are they worth the effort and cost to create?

We can generally agree that it’s better to have a suitable and legally valid will in place at the time of our death, then to die without having any will at all. But is it the best option available to us?

When we die, we leave our property behind. The question becomes– who will manage and distribute our assets, and who will inherit our assets?

Without a legally enforceable will in place at the time of our death, state law is the only determiner as to the answers to these questions. (Important note:  A living trust can also provide a solution. In many cases, a living trust is the more suitable estate planning tool, but for the purpose of this blog post, we are focusing on the will. Click here for more information about living trusts.)

With a valid and enforceable will in place, we assume some agency over our own estates. We decide for ourselves– not the state.

There are many different kinds of wills. Some may be more suitable than others, but all wills have a fundamental weakness, as described within this post (below). Should we rely on a will or not?

What does a will do for us?

A will provides each of us with an opportunity to decide for ourselves who will receive our property when we pass away, and who will administer such distribution(s). In this post, we will discuss what happens when you don’t have a will, as well as the types of wills that are legally enforceable under California law. Wills, however, do not avoid probate. All wills must be probated.

How is property distributed if there is no will at the time of death?

If a decedent passes away without a valid will (or living trust), their assets will be distributed in accordance with state intestacy law.  Intestacy laws are based upon familial relationship.  In other words, the law presumes your heirs based upon the familial position of each your family member in relation to you, providing a hierarchy of importance based upon what the state has decided to be most important– for you. Below are some of the most common situations based on California’s intestacy statute:

How is property distributed if there is no will at the time of death (under California law)?

  • If the decedent was married with no children: All assets are distributed to their surviving spouse.
  • If the decedent was not married but has children: All assets are distributed to the decedent’s children.
    • If there is more than one child, then assets are shared equally amongst the living children. If a child predeceased the decedent, that child’s children will take that child’s share.
  • If the decedent was married with children: Decedent’s community property assets are distributed to the surviving spouse. The decedent’s separate property is divided among the surviving spouse and the children
    • If the decedent has only one child: One half to the child and one-half to the surviving spouse
    • If the decedent has two or more children: One-third to the surviving spouse and two-thirds to the children
  • If the decedent has no spouse or children: All assets go to the decedent’s kin or heirs based on the closest relationship, (e.g., first parents, then siblings, then cousins, etc.)
  • If the decedent has no heirs or kin: All assets escheat (transfer) to the State of California.

Types of Wills:

There are several different types of wills, a few of which are discussed below. All of these have a few things in common, the most important of which is that all wills must be probated.

Probate is the (dreaded) process by which the court decides oversees the administration of an estate. Depending on whether the decedent died with a will or without a will (known as, ‘intestacy’), the probate court generally does the following:

  • If the decedent had a will, the court:
    • Determines if the will is legally valid.
    • Appoints an executor to administer the assets of the estate, based off of the nomination(s) set forth in the will (which usually allows for the executor to serve without having to post a bond.
  • If the decedent died intestate (e.g., without a will), the court:
    • Appoints an executor based upon statutory considerations, most likely also requiring such executor to post a bond.
  • In both kinds of probate, the probate court also:
    • Determines the valuation of all of the decedent’s assets, usually with a third-party, court-appointed referee.
    • Allows for the resolution of all of decedent’s outstanding debts, claims, and disputes.
    • Requires and reviews accountings from the executor.
    • Determines the identity of the heirs of the estate, based on the terms of the will or the intestacy statute.
    • Orders the executor to distribute the assets of the estate to the proper heirs in accordance with the will or intestacy statute.
    • Orders for the estate to pay the fees and costs of the executor, executor’s attorney, and the referee.

Needless to say, probate is very time-consuming and costly. Although a will provides protection from intestacy laws, wills do not avoid probate altogether.

Holographic Wills

A holographic will is a will that is in the handwriting of the testator and signed by the testator as opposed to the typical will which is typed and signed in front of witnesses.

While a holographic will is an easy, cost-effective option, there are many potential pitfalls with using a holographic will. These pitfalls include:

  1. A handwritten will is only useful if it can be read. If the handwriting of the testator is not legible, the will may as well not exist.
  2. When a handwritten will is probated, proof that the document is in the handwriting of the testator must also be presented. This can be difficult if there are not enough known examples of the testator’s handwriting. If it cannot be proven that the document is in the handwriting of the testator, the document is invalid.
  3. If there is a dispute over the mental capacity of the testator, it can be very difficult to prove that the testator had the capacity to execute the will as it was not executed in front of witnesses.
  4. The handwritten will may not dispose of all of the testator’s property. All property that is not handled by the handwritten will is handled by the intestacy laws and may escheat to the state if the testator does not have heirs or kin.

Given the numerous ways a handwritten will can result in costly litigation or be invalidated, they are only the best option when there is no opportunity to do anything else.

The (Common Standalone) Will

This is basically the generic will that most of us think we know a little bit about. It is formalized in such a form that it is typed/printed out, and is executed in the presence of two witnesses. This sort of will is the more reliable option (as opposed to the holographic will). It is essentially for those people who do not elect to have a living trust, and is thus created essentially as the comprehensive estate plan. Although better than a holographic will (except in exigent circumstances), this will still has the same fundamental weakness as all other wills— it must be probated.

Pour-Over Will

A pour-over will is a legal document used in conjunction with a living trust to ensure that assets that should have been placed in the trust still get “poured into” the living trust after death.

A living trust only has authority over those specific assets placed within the trust (e.g., within the trust estate). But sometimes a person may forget or just simply fail to transfer an asset into their trust before they die, essentially relegating that asset to be an asset outside of the trust (also known as the probate estate). As you might guess, those assets within the probate estate (e.g., outside of the trust) must be probated, while those within the trust estate can avoid the headaches of probate and continue to be administered by the trustee in accordance with the terms of the trust.

A comprehensive estate plan should a way to deal with assets that were never placed into the trust before death (whether on purpose or by accident).

Without proper planning, getting an asset that should have been placed into your trust prior to death actually transferred to your trust after your death can be very difficult. In some cases, it can be downright impossible unless you happened to create a pour-over will as part of your estate plan.

The hope is that the pour-over will never have to be relied upon because hopefully all of the relevant assets have been properly placed into the living trust, making probate unnecessary.

Should we be relying on a will or not?

If our goal is to avoid probate and make our own decisions about our estate– then relying solely on a will may not be the best option available to us. That doesn’t mean one shouldn’t have a will as part of their estate plan, it means that one might be better off with a living trust as the centerpiece of the estate plan, with the pour-over will as the back-up to that plan.

It is always best to speak with an attorney to know for sure. As with most things legal, the details are crucial, so as useful as some general knowledge may be, it should not take the place of actual legal counseling.

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