When you think about estate planning, the first things that probably come to mind are wills, trusts, and other documents that help you pass your assets on to the people and organizations you choose after you’re gone. But there’s more than that to estate planning. After all, what good is transferring assets if they can be taken by someone else after you die? Fortunately, there are a number of ways to protect your assets so they can only go to someone of your choosing. As with any legal topic, inheritance and estate planning laws in California are dense and complex. To understand how the right planning can protect your assets from being seized by someone else after your death, here is an introduction to some of the key concepts in California inheritance law.
Taxes and inheritance law are important
Despite the absence of estate or inheritance taxes in California, handling an estate is not a simple matter. California inheritance law still has quite a few obligations for the estate and personal representative. Here is an overview.
- There is no estate or inheritance tax in California, but the estate still has to file tax returns.
- A will can be used to structure California inheritance law to your advantage.
- Having a valid last will and testament in place makes administering an estate a lot easier. In California, a will is considered valid if it names beneficiaries, designates an executor/personal representative, and specifies a guardian for any children.
- A probate case must be opened if the estate comprises life insurance, retirement benefits, or real or personal property of any value. If the estate is valued under $150,000 and has been in existence for at least forty days since the death of the person, an Affidavit for Transfer of Personal Property may be filed. Once the affidavit has been issued, the custodian of the deceased’s property (for example, a bank) must relinquish it.
If you die without a will in California, your estate will be distributed according to the California Probate Code
A person who dies without a valid will is said to have died intestate. The court will appoint an executor to administer the estate and pay the estate’s debts and expenses. In addition, the court will divide the estate’s assets according to California inheritance laws.
During a marriage, all property and assets acquired are considered community property, and all debts incurred are likewise considered community debts. For the purposes of this article, a domestic partner is considered a spouse, and a domestic partnership is considered a marriage. (Community property refers to all property and assets acquired during a marriage.)
During a marriage, if one spouse receives inheritances or gifts and keeps them separate, keeping them distinct from marital funds, they are considered to be separate property. Assets acquired before the marriage or after a divorce are also considered to be separate property.
The California inheritance laws are comprehensive and complex, extending to uncles and aunts, cousins, nieces, and nephews, as well as grandparents and other relatives. We will discuss the closest relatives here, although inheritance laws apply to a wide range of relatives. Half-siblings are treated the same as full siblings, for example.
If an individual dies with just a partner and no other related people, all the community and individual belongings are inherited. If a baby dies, his or her property (which is all individual property since there is no ‘community’) passes first to parents or siblings.
If a person dies with a spouse and children, the spouse inherits the decedent’s percentage of community property (all of which would then be in the spouse’s possession). If there is just one child, that child inherits one-half of the separate property; if there are multiple children, they receive two-thirds of the separate property in equal amounts. The remaining one-third or one-half of the separate property, in addition to the spouse’s inheritance, is inherited by the spouse.
When a person dies with a spouse and surviving parents (but no children), the decedent’s portion of community property and one-half of the separate property is inherited by the spouse. The parents receive the other half of the separate property if the decedent had surviving siblings but no surviving parents.
There are certain things to keep in mind
In the absence of near relations, the heirs are the subject’s aunts and uncles, nieces and nephews, grandparents, great aunts and great uncles, cousins, and children, parents, and siblings who outlive the deceased’s spouse.
A child born in a marriage is considered to be the child of both spouses, regardless of the biological parentage. Even if a parent dies, the child still has the right to inherit, and if genetic material is extracted two years after the parent’s death and used to create a child (with permission being given while the parent was still alive), the parent is still considered to be the legal parent and the child has a right to inherit.
A relative conceived after the decedent died but born before the decedent died also has inheritance rights as described above.
Unless the court decides that an adoption would have taken place except for a legal technicality, step-parents, step-children, and foster children are not entitled to inherit. This is not always easy to establish.
A relative who deliberately murdered someone cannot inherit if the victim was deprived of inheritance rights. An undocumented immigrant, on the other hand, can inherit if he or she is related to the victim.
As a rule, life insurance policies, pensions, and other retirement accounts specify beneficiaries. When the beneficiary is named, the funds are passed directly to the beneficiary and are not part of the decedent’s estate. The estate may be named as a beneficiary, and, if the decedent died without a will, the funds would be distributed according to state guidelines or the decedent’s will.
We Can Help
To ensure that your assets go to the right place, contact Lewman Law for a consultation for a simple will, trust, or other estate planning vehicle. If you’ve been named the executor of an estate and need legal assistance, you can also request a consultation.