California Estate Planning Help

Estate planning in California is a legal process where an individual ensures that his or her property is transferred and disposed of in the matter intended once that person passes away and with the least possible tax consequences.

Making a will

A will ensures that the decedent’s wishes are honored and all intended beneficiaries receive the assets the decedent intended them to have. Without a will, the state will appoint an administrator and dispose of the decedent’s assets according to state law in a manner that may not have been the decedent’s intent while living. The process can invite unwanted tax consequences and lead to family disputes.

A will should include the following:

  • Property distribution
  • Provisions for any children
  • Executor of the estate
  • Other considerations

Plan for your funeral and take inventory of your valuable possessions and how they are to be distributed.

Avoid probate

Probate is a process that verifies the will, settles all claims on the estate, determines tax liabilities, sells off property to pay creditors and debts, and distributes the remaining assets to legitimate heirs. In California, probate lasts from one year to 18 months depending on if federal estate taxes are involved.

Probate may not be avoided completely in some cases even if a will is made, especially in large estates, but there are ways to dispose of assets while the individual is still living.

  • Living trusts—A living trust allows a person to name a trustee to manage the trust and its assets. This allows you or an appointed trustee to control or manage the assets for beneficiaries until they reach a certain age. It also protects assets from creditors if you have an irrevocable trust.
  • Joint ownership—Joint ownership of property with a right of survivorship allows title to automatically pass to the surviving joint owner on your death. In California, community property laws dictate that your spouse will receive your share or be divided among your surviving spouse and children.
  • Accounts with designated beneficiaries—Property with a title may have designated beneficiaries such as bank accounts, real property, cars and retirement accounts like an IRA. An IRA allows you to contribute a certain sum each year without income tax, and the interest earned is not taxable. A beneficiary may stretch the distributions of your account over a period of years to minimize tax consequences.
  • Distribute assets while living—Real property or valuable personal possessions may be transferred during your lifetime to avoid probate.

California has a small estate exemption of $150,000, allowing these estates to be distributed outside of probate. Find out more information about what is probate at our sister site,

Financial power of attorney

A power of attorney allows you to appoint someone to handle your affairs once you become incapacitated. The individual has a fiduciary duty to look out for your best interests, keep records and avoid conflicts of interest. It is revocable on your death, or it may have an expiration date.

Living will

Also known as a health care directive, this document sets forth your wishes as to life-prolonging health measures and other treatment if you become incapacitated. Forms are easily found online or at medical facilities and may be easily amended.

Power of attorney for health care

Consider a health care power of attorney for someone to make health care decisions for you.

Additional considerations

Most individuals should have some of the above plans for distributing their estates but there are other considerations:

  • Estate taxes—Only very large estates valued at $5.25 million for 2013 are subject to estate taxes.
  • Insurance—If purchased early in life, life insurance can be inexpensive and provide a valuable cushion for your family. If you have other sources of benefits like a pension, group life insurance or large IRA, it may not be needed.
  • Business succession—A successful business should have a prearranged method of distribution on your death or retirement to ensure its transfer to a partner or family member. Corporations or family limited partnerships may enable the smooth transfer to children or to issue stock to minimize taxes.

Talk to an estate planning attorney

State and federal estate law are subject to frequent changes. Talk to a California estate planning attorney to ensure your assets are protected and tax consequences are minimized.

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