Last week, I blogged that a common refrain that we hear from people when we encourage them to consider estate planning is “But I don’t need an estate plan.” This post addresses the second of three of the most common refrains that we hear.
I don’t need an estate plan because I want everything to go to my spouse.
Many married (or registered domestic partner) couples believe that they don’t need an estate plan because each spouse or partner wants everything to go to the other. This is true for community property. However, if either spouse owns any separate property, the separate property will be divided between the surviving spouse and other relatives. Separate property generally includes anything owned prior to marriage and anything acquired during marriage by gift or inheritance, and titling a separate property asset jointly or commingling it with community property will not convert it to community property. Many married couples will have at least some separate property, and if the surviving spouse and his or her in-laws do not get along, it could lead to disputes. Additionally, if you have children, half to two-thirds of the separate property will go to your children, depending on the number of children. If the children are minors, a court proceeding may be needed to distribute the assets to a guardian of the estate for the child or into a blocked account until the child turns 18 (even if the child has a surviving parent). Even if a large sum of money is involved, there is no way to prevent the child from accessing the entire account at age 18.
Additionally, couples occasionally die together – car accidents are a notable scenario. Without an estate plan, the laws of “intestacy” will apply, and the California Probate Code provides for a default system of asset distribution to your relatives. Without a will or a trust, you cannot avoid this default system, even if it is not what you want.
Finally, for many people, saying “I want it all to go to my spouse” often comes with exceptions. For instance, each spouse may have sentimental items that they want to give to a family member or friend, or small cash gifts to certain relatives. Additionally, many people want to impose a “survivorship” requirement of at least a month, so that if their spouse dies shortly after they do, their property will go to their own family, instead of being treated as having passed to the spouse and then passing as part of the spouse’s estate. However, in order to make these exceptions (or any others), you need a will or a trust.
Even if none of these issues applies to your situation, it is still useful to set up a simple estate plan. A lawyer can prepare a plan in a way that both accomplishes your goals and will make the ultimate administration of your estate easier for your loved ones. Dealing with a spouse’s death and trying to sort out his or her estate can be an incredibly difficult time, and even a basic estate plan can streamline this process.