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Estate Planning: Understanding Wills and Probate Thumbnail

Estate Planning: Understanding Wills and Probate

Leaving a will for your family is a considerate move on your part that will prevent your family from dealing with several hurdles after your eventual passing.

No matter how much property you own, having a comprehensive estate plan will ensure that the property goes to someone of your choosing.


You have an estate.

It doesn’t matter how limited (or unlimited) your means may be, and it doesn’t matter if you own a mansion or a motorhome. Whether you’re considered wealthy or of modest means, when you die, you leave behind an estate. For some, this can mean real property, cash, an investment portfolio, or other investments. For others, it could be as straightforward as the $10 bill in their wallet and the clothes on their backs. Either way, what you leave behind when you die is your estate.

But I don’t need estate planning—do I?

Think about it. If your estate is small, should you still have an estate plan? If you’re just leaving behind the $10 bill in your wallet, who will inherit it? Do you have a spouse or children? Is it theirs? Should it go to just one of them or be split between them? If you don’t decide, you could potentially leave behind a legacy of legal headaches for your survivors. Estate planning is about deciding how what you have now (money and assets) will be distributed after your death.

Creating an estate plan may give you the comfort of knowing that your wishes will be carried out when the time comes. Your estate plan could include wills and trusts, life insurance, disability insurance, a living will, a pre-or post-nuptial agreement, long-term care insurance, power of attorney, and any other assets that you own.

Is having a will enough?

While your will states who your beneficiaries are, those beneficiaries may still have to seek a court order to have assets transferred from your name to theirs. In such a case, those assets won’t lawfully belong to them until the court procedure (known as probate) concludes. Estate planning can include items such as properly prepared and funded trusts, which may help your heirs avoid probate.

Incidentally, beneficiary designations for qualified retirement plans and life insurance policies usually override bequests made in wills or trusts. Many people never review the beneficiary designations on their retirement plan accounts and insurance policies, and the estate planning consequences of this inattention can be serious. For example, a woman can leave an IRA to her granddaughter in a will, but if her ex-husband is listed as the primary beneficiary of that IRA, those IRA assets will go to him per the IRA beneficiary form.

Where do you begin?

Knowing your hard-earned assets will transfer to who you want, when you want and how you want is a critical and often overlooked aspect in financial planning. From maintaining current designated beneficiary forms and titling on your accounts, to organizing essential financial and legal documents, to working with estate planning attorneys as needed to implement legal and trust work to ensure your wishes are seamlessly carried out—the team here at California Retirement Advisors aims to address all these considerations as part of our comprehensive approach.

Can I create my own estate plan?

Maybe you have seen those will-in-a-box kits. Maybe you have even considered picking one up. Think twice about that. While you can draft a will on your own, there are plenty of reasons why you may not want to go that route. Remember: This is more complicated than just “leaving a note.” Most people do it themselves to save money, but they may overlook or forget to take care of some important details, the cost of which could easily outweigh any savings.

Wills, trusts, and estate plans should be crafted with the help of attorneys. Fortunately, CRA has relationships with attorneys. Instead of searching the Internet or the Yellow Pages for a stranger, contact one of our certified financial planners for assistance in all aspects of estate planning.

What happens without a will?

Every day, people die intestate. In legalese, this means without a will. This opens the door for the courts to decide what happens with their estates.

When no valid will exists, state intestacy laws dictate how assets are distributed. These laws may divide an estate evenly (or equitably) among heirs. Any assets held in joint tenancy may go to the joint owner. Assets held in a trust may transfer to the trust beneficiaries (with spouses getting a share of those assets in some states). Community property may go to a spouse or partner in community property states.

Simple, right? Unfortunately, the way assets transfer under these laws may not correspond to the wishes of the deceased person. Did the decedent want some of his or her estate to go to a charity or a person close to them? These laws will not allow this. State law may also decide who is the executor of the estate since the decedent never named one.

If the deceased person designated beneficiaries for his or her retirement accounts and life insurance policy, the retirement accounts and insurance proceeds should be transferred to these beneficiaries without dispute, even when no will exists. When life insurance policies and retirement accounts lack designated beneficiaries, the assets are lumped into the decedent’s estate and subject to intestacy laws.

Articulate your plans for the estate and your family.

Most people have specific ideas about who should inherit what from their estates. Anyone who cares about the destiny of his or her wealth should take this basic estate planning step. California Retirement Advisors is here to aid you in this process, giving you the security and freedom to decide how you want your inheritance to be spread out.

When an individual dies intestate, the future of his or her estate is largely up to the courts. A basic, valid will stating his or her wishes may help facilitate the transition of assets after they’re gone.

By Christian Cordoba
Founder, California Retirement Advisors

Investment advisory services offered through Mutual Advisors, LLC DBA California Retirement Advisors, a SEC registered investment adviser. Securities offered through Mutual Securities, Inc., member FINRA/SIPC. Mutual Securities, Inc. and Mutual Advisors, LLC are affiliated companies. CA Insurance license #0B09076. This content is developed from sources believed to be providing accurate information and provided by California Retirement Advisors. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. California Retirement Advisors, nor any of its members, are tax accountants or legal attorneys and do not provide tax or legal advice. For tax or legal advice, you should consult your tax or legal professional.