A last will and testament is a document that applies only to your “probate estate.” A probate estate may not include all of your assets. In some cases, you might not even own any assets subject to probate.
Generally, any asset titled solely in your name is a probate asset. For example, this would include your bank account or a house owned by you alone. After your death, these assets become part of your probate estate and may be disposed of according to the terms of your will. If you leave no will, your probate estate is subject to California's intestacy law, which distributes property to your closest surviving relatives.
If you own an asset together with other persons in a “joint tenancy,” this is a non-probate asset. Let's say you are married and you and your spouse own a house as joint tenants with right of survivorship. When you die, your spouse automatically becomes the sole owner of the property. The house does not pass to your probate estate because of the joint tenancy. The same would apply if you and your spouse co-owned a checking account.
Similarly, an asset is also non-probate if it is paid over to someone other than your estate after your death. This commonly includes life insurance policies or retirement accounts. If you name your spouse as beneficiary of your life insurance, for instance, then the policy itself does not pass to your probate estate.
Finally, any assets you transfer to a trust falls outside of your probate estate. Many people choose to set up such living trusts—which you may revoke or amend at any point during your lifetime—specifically to avoid probate. Instead of an executor or personal representative overseeing your probate estate, your trust names a successor trustee to manage or distribute any assets after your death.
Do I Even Need a Will?
So let's say you die without any probate assets. Does this mean you do not need a will? Not necessarily. If you choose to establish a living trust, there is always a chance you will neglect to transfer one or more assets into the trust. To cover your bases, you can sign what is known as a “pour-over” will, which is basically a last will and testament that leaves any remaining probate assets to your trust.
But what if you have no assets at all? A will is still advisable as you may acquire assets in the future. It may also be necessary to establish an estate after your death for other purposes, such as paying any debts. A will does not only distribute property; it allows you to appoint a personal representative to manage your interests.
Regardless of your asset situation, you should speak with an experienced California estate planning attorney who can advise you on the best course of action regarding a will or trust. Contact the Law Office of Scott C. Soady in San Diego today if you have any questions.