What Would Happen If I Died Without An Estate Plan?
There are several reasons why it is important to have an estate plan. In your lifetime, you most likely will want to make sure that you have control of your assets, and if anything were to ever happen to you – such as incapacitation – that your personal estate would be taken over and controlled by a trusted person of your own choice. Before you pass away, you would want to ensure that your assets are distributed according to your wishes; especially if you have children, family, a business, property, and even charitable bequests.
As a California resident, and by chance you do not have an estate plan or a will, the state of California actually has a plan to default your assets. You should avoid probate, but this plan includes probate (more below). This default plan through California gains the state the ability to distribute your estate according to a specific formula. But what if you wanted funds to go to a specific charity? What if you wanted a certain friend, pet, or child to receive specific amounts of tangible assets? Did you want children to receive their trust at the age of 18, or 40? You have no choice now.
Should I just get a will?
At death, wills officially take effect. Wills though, do not include medical choices or incapacity during your life. This is unfortunate because it also does not ensure that your heirs will be able to avoid the horrible process of probate.
With no beneficiary designation or trust, wills can definitely trigger action for probate. Probates can span from fifteen months, until (may be longer during covid). Probate can be an extremely long process and have the tendency to be very costly. Probate fees, statutory fees that is, are based on your gross, not a net estate.
Is there a better way?
An estate plan goes hand in hand with a trust. A trust provides for the potential of you being incapacitated within your lifetime and also is able to distribute your assets to your beneficiaries according to your specific plans and wishes. A trust also allows you to avoid probate as they are properly titled.
With a trust, you are able to decide on and actually appoint trustees to help you manage the actual trust that you have set up. If anything were to happen to you, and you are not able to manage your own financial affairs, the people/person you entrusted as your trustee/s can have absolute authority legally to control and manage your assets for you, as opposed to the state.
If you have no trust in this position in your life, yes, you would have to go through a conservatorship to be able to have someone take over your estate for you and manage it on your behalf. In this aspect, the conservatorship would be appointed by the state, and this person can even be a stranger completely to you.
Logically, it is imperative to avoid this greatly impersonal and very costly process by just appointing a family member, significant other, or even friend for this imperative task.