Asset and Wealth Protection

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Your Default Estate Plan, Part II

Holocaust survivor and New York real estate developer Roman Blum left no instructions for the distribution of his $40 million fortune when he passed away in 2012. Since he had no living relatives, the entire amount is likely to revert (“escheat”) to the State of New York.

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 will).

Distribution in California in the absence of a valid will

California’s laws of intestate succession outline how a person’s estate will be distributed in the absence of 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) shares 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 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 one-half separate property share. 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 children, or their issue. 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 over the one-half share of the decedent’s separate property estate. 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, as in Roman Blum’s case, no heirs can be found at all, the entire estate will escheat 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 (1/3), Jane’s one child would take her share (1/3), and Jill’s two children would split her share equally (1/6 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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