Will cash-short California get your assets if you die without a will or trust?

The State of California, no matter how bad Arnold says the fiscal crisis is, will not receive your real and personal property if you die without a will or trust.

First of all, any real property (for example, a home) held in joint tenancy goes to the surviving owner. This is usually the surviving spouse of the decedent. Other property held jointly, like an automobile, also goes to the surviving spouse or other person named on the title.

Bank and investment accounts also go to joint owners or anyone named as a beneficiary. Other personal property where there is no title, such as tools, clothes, stamp collections and the like, are normally distributed to family members who want them, but oftentimes they end up in a garage sale.

If there are no joint tenants or named beneficiaries then the property is distributed according the law of intestate succession. To die “intestate” means to die without a “testament” (a will) or trust. The distribution of assets under the law of intestate succession reflects what historically most people want upon their death.

In California, community property (essentially property acquired after the marriage no matter who paid for it) goes entirely to the surviving spouse, even if they are not living together anymore. Separate property (property acquired before marriage and property inherited after marriage) goes to the spouse and children of the decedent. The spouse gets half if there is only one child and one-third if there are two or more children.

These separate property provisions also apply to domestic partners, but domestic partners must legally register. Living together is not enough.

If there is no spouse, then the decedent’s children inherit in equal shares, receiving their share upon reaching 18 years of age. If a child is no longer living, then his or her children share equally the deceased child’s share. Children and grandchildren include blood descendents as well as adopted children.

If there is no spouse, children or grandchildren, then the decedent’s parents inherit. And if they are not alive, which is usually the case, brothers and sisters inherit in equal amounts. The list goes on with aunts and uncles, nieces and nephews, cousins and even step-children inheriting. Only if there is no relative at all, or none can be located, is a decedent’s property deeded to the State and a smiling Arnold.

Even if intestate succession is how a person would want his or her estate distributed, there are still things to consider that may lead one to want a will or trust:

• Property with a total value of over $100,000 is still subject to probate and its related expenses. This could run into the tens of thousands of dollars. (The same is true of a will. This is why many people choose a trust that is not subject to probate.)

• Property passes immediately to children when they are 18. Many would rather place the inheritance in a trust where the expenses of education, for example, are paid when needed, but the balance is paid when the child is more mature and less likely to spend it unwisely. What would you have done had you inherited several hundred thousand dollars at 18? How long would it have lasted?

• An heir cannot be disinherited with intestate succession. Every person at a level of relationship described above will receive an equal share.

• Intestate succession says nothing about who becomes the custodian of minor children. The courts will favor close relatives, but we all know that not all close relatives will make good parents.

• Intestate succession says nothing about one’s desires about being on life support, donating organs or burial instructions.

The bottom line is that an estate will not go the State to help with the budget crisis if one dies without a will or trust. However, if one has specific desires about who will inherit his or estate, the conditions of that inheritance and other factors referred to in the bullet points above, then a will or trust is essential. Preparing all the documents that cover these issues is called “estate planning.”

Lawyers are often asked about the savings that can be had by using online services to create estate planning documents. A quick review of one of the most advertised shows that when adding up the costs of all the documents normally prepared in an estate planning package for a husband and wife (trust, power over wills, powers of attorney, advanced healthcare directives, privacy act releases, property transfers to the trust, for instance) the savings are not that significant. In addition, the more individualized the documents are with respect to one’s wishes, the less suitable the online documents are.

But admittedly, for many, especially those with small estates and uncomplicated family situations, the online documents may be quite satisfactory. The important thing is that we all really need to do some estate planning.

Carl Morrison practices at Morrison Law in Bonsall. He may be reached at (760) 724-9580. His associate, Andrea Aston, may be reached at (760) 758-1565.