Your Default Estate Plan, Part II

You can designate who inherits from you, or you can let intestate succession laws decide for you.

Holocaust survivor and New York real estate developer Roman Blum apparently left no instructions for the distribution of his $40 million fortune when he passed away in 2012. The first will produced was determined to be a forgery, and another (submitted by the caregiver and sole beneficiary of Blum’s lover during WWII) is being analyzed. Since Blum had no living relatives, his entire legacy may escheat (revert) to the State of New York. Half of the money has already been paid over to the federal government to satisfy his estate tax liability.

In Part I, we discussed the financial and physical consequences of the failure to set up an estate plan. In this post, we will explain how the State of California handles distribution of the assets of someone who dies “intestate” (without a valid last will and testament).

Distribution in California in the absence of a valid will

California’s laws of intestate succession outline how your estate will be distributed if you die without a valid will. Note that the term “issue” refers to direct linear descendants – children, grandchildren, great-grandchildren, etc.:

  • Surviving spouse, two or more children or their issue. The surviving spouse inherits all of the community property and quasi-community property. The surviving spouse inherits one-third of the decedent’s separate property, and the children (or the issue of any predeceased child) share the other two-thirds. California Probate Code §§ 6401(a), (b), and (c)(3)
  • Surviving spouse, one child or their issue. The surviving spouse inherits all of the community property and quasi-community property. The surviving spouse inherits one-half of the decedent’s separate property, and the child (or their issue, if the decedent’s child has also passed away) inherits the other half. California Probate Code §§ 6401(a), (b), and (c)(2)(A)
  • Surviving spouse, no children or their issue. The surviving spouse inherits all of the community property and quasi-community property. The surviving spouse inherits one-half of the decedent’s separate property, and the decedent’s living parent or parents inherit the other half. If the parents are both deceased, the parent’s issue (meaning, the decedent’s siblings or nieces/nephews if a sibling is not then living) will split the remaining one-half of the decedent’s separate property. California Probate Code §§ 6401(a), (b), and (c)(2)(B)
  • Surviving spouse, no children, and no other close relatives. The surviving spouse inherits all of the community property and quasi-community property. If there are no living issue, parents, siblings, nieces or nephews, the spouse will get all of the separate property as well. California Probate Code §§ 6401(a), (b), and (c)(1)
  • No surviving spouse. If there is no surviving spouse, the entire estate will be distributed to the decedent’s issue (children, or grandchildren if their parent is deceased). If there are no issue of the decedent, the decedent’s parent(s) will inherit. If the parents are both deceased, the estate will go to the parent’s issue (the decedent’s siblings or nieces/nephews if a sibling is not then living). Next in line are grandparents and their issue (the decedent’s aunts, uncles, and cousins). If there are no grandparents, aunts, uncles, or cousins, then the decedent’s stepchildren may inherit. If there are also no stepchildren, other next of kin will be sought out, with those claiming the nearest ancestor receiving a priority claim. If there are no next of kin, then the relatives of the decedent’s spouse will inherit. California Probate Code § 6402
  • No heirs at all. If there is an estate with no heirs, the entire estate escheats to the State of California. California Probate Code § 6404

How “issue” inherit

Probate Code § 6402 utilizes rather strange language when explaining how issue take a deceased parent’s share: “The issue take equally if they are all of the same degree of kinship to the decedent, but if of unequal degree those of more remote degree take in the manner provided in Section 240.” What this means is that descendants will share any amount of their deceased parent’s inheritance.

For example, suppose you have three children – Jack, Jane and Jill. When you die, Jack was still alive, Jane had predeceased you with one child, and Jill had predeceased you with two children. Jack would inherit his share (1/3rd), Jane’s one child would take Jane’s share (1/3rd), and Jill’s two children would split her share equally (1/6 th each). Expressions typically used in estate planning documents to achieve this result include “to my then living issue by right of representation,” or “to my then living issue per stirpes” (literal translation: “by root or stocks”).

San Francisco Estate Planning and Tax Firm

Too many people delay their estate plans, usually with disastrous results. An estate plan is not a death wish – it is merely a series of documents that set forth your wishes, provide your family with security – and you with peace of mind. Call the estate planning and tax attorneys at Moskowitz, LLP for a consultation.

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