Q. If I die without a will, do my assets go to the state?
A. Generally, no. The state would be the last potential recipient, and then only if your successors or next of kin could not be located. Here is how your assets would be handled under California law:
Joint Tenancy Assets: Assets held in joint tenancy form, such as “John Jones and Mary Jones as Joint Tenants with Right of Survivorship ” (sometimes abbreviated JTWROS, or merely as “joint tenants”) would go to the surviving joint tenant, and this would be the result even if you had a Will; in essence, the Joint Tenancy overrides a Will. If you are the survivor, then they would go to you and, upon your later demise, would go as your separate property as noted below.
Beneficiary Assets: Assets titled in a manner which designates specific beneficiaries would go to those beneficiaries. Examples: Financial accounts with “Pay on Death” or “Transfer on Death” designations, insurance and annuity policies, and retirement assets such as IRA’s and 401(k) accounts. Again, the named beneficiaries would take even if you had a Will.
Other Assets: other assets, including those held in your name, alone, would go to your next of kin under the California law of Intestate Succession. Dying intestate means dying without a Will. In this situation, California law sets out a plan of distribution as follows:
- Community Property: all would go to your spouse or Registered Domestic Partner (“RDP”) if he/she survived you. If you, yourself, were the survivor, the assets would go to you as your separate property, but subject to the special 15 year rule for a predeceased spouse, as noted below;
- Separate Property: assets would go to your surviving spouse/RDP and to your children. The allocation would depend upon the number of children you have: (1) if you are survived by a spouse/RDP and only one child, they would each split 50/50; (2) if you are survived by a spouse/RDP and two or more children, your surviving spouse/RDP would receive only one-third and the children would divide the remaining two-thirds.
- The 15 year rule: if you had a former spouse/RDP who died less than 15 years before you, but left his/her own children surviving, then the portion of your estate attributable to your predeceased spouse would go to his/her surviving children.
If none of the above provisions direct distribution of your estate, then the law looks to your family tree: Ownership would first to your parents if alive, then to your brothers and sisters, then to your nieces and nephews, then to more remote family members in a prescribed order based upon consanguinity. Only if no one in your extended tree can be located, would your assets escheat to the state.
However, this comment is not an invitation to forego making a Will or a Trust, because you would then give up some advantages that they offer, such as: the right to (1) designate your own beneficiaries, (2) name the overseer of your estate, (3) do tax planning, (4) protect the inheritance of children from former marriages, (5) create protective trusts for minors or persons on public benefits, (6) provide management in event of your own incapacity and long term care, (7) the option of avoiding probate by creating a Living Trust, and more. So, do make that Will and/or Trust. Remember that a Will, unlike a Trust, generally requires a probate.
Note: We always recommend that clients who opt to create a Trust also create a “back-up” Will. Reason: clients often inadvertently leave assets out of their trust and the “Pour Over” Will then “pours” these omitted assets into the trust so that there is a cohesive plan of distribution.