Does Everyone Need a Will?

Attorneys who create estate plans in California see it all the time: Through their door will walk a relatively young person whose spouse has recently passed away. It’s quickly clear that the couple had assumed if something happened to either one of them, the other would inherit the deceased’s assets. Then the lawyer has to explain: Without an estate plan, that’s not always what happens. 

“I don’t think many people realize that,” says Elizabeth A. Bawden, an estate planning attorney at Withers in Los Angeles.

California’s laws account for community property and separate property. Simply put, community property is the assets the couple has earned or acquired with earnings during the marriage. Separate property is what either had prior to marriage or received by gift or inheritance. So, if one entered the marriage with a $1 million inheritance, that would count as separate property. Without a clear will in place, those assets are distributed to their spouse and others. It’s the “and others” part that can get complicated. 

Bawden recalls one case in which a man had purchased a house prior to marriage. He and his wife ended up living in the house together for 40 years, but upon his passing the house was considered separate property. That meant the home belonged to his spouse and, in part, his children. In this particular case, it wasn’t a problem since everyone got along and a resolution was easy to figure out. But that isn’t a guarantee.

Had one of the children been estranged, for example, the matter could have gotten complicated very quickly. Imagine that woman having to move out of the house she shared with her husband for all those years, Bawden says. “That sort of thing is really stressful and scary for someone dealing with unexpected grief, on top of all that.”

Getting to Brass Tacks

Examples like this are why Steve Trytten, a founding partner at Beacon LLP in Pasadena, starts his consultations by answering the most basic of questions: Why does everybody need an estate plan? Many clients have been told they need one, but don’t always understand why. 

“People need to leave instructions if they die or become incapacitated,” Trytten says. 

Those instructions, he adds, need to address a few different things, starting with answers to these simple questions:

• Who is going to be in charge of your affairs if you can’t be? 
• What happens to your assets?

The answers to those questions aren’t often simple, even for relatively small estates. That’s where estate planning attorneys come in.

“Estate planners are repositories of all of the other challenges that their other clients have faced throughout their practice,” Trytten says. “That wisdom is brought to bear to stay a step ahead of the things today’s client might face someday.”

Digital Lives

A newer component to estate planning has to do with how much of our lives are on our devices. What would happen if a loved one passes away and you don’t have the password for their phone, email or computer?

“When I was a young lawyer and someone became incapacitated, we would monitor their mailbox for a couple months,” Bawden says. “We’d see they had an account at Bank of America or a Schwab account. Now that many get everything through email or online access, it’s much harder to figure those things out if they don’t leave behind a really good road map.”

What about that big collection of family photos they’ve got saved somewhere? Could a loved one gain access to those, should the need arise? 

“Planning for digital assets is another really significant conversation that people are having more and more,” Bawden says. 

For example, she asks clients if they’ve looked into whether their account providers have legacy contacts, through which they designate access to someone in the event of incapacity or death. For passwords, she recommends a good password keeper program. “It not only allows people to use stronger passwords while they’re alive, but all of the well-regarded programs I’ve looked at also have a legacy contact option.”

Retirement, Wills and Trusts

Anyone with a retirement plan may recall how easy it was to designate their spouse as their beneficiary. What can be harder, though, is choosing someone other than a spouse. 

There are federal laws in place that dictate 401(k) assets, for example, should go to the decedent’s spouse. It’s possible to change that, but only with the right paperwork from an estate planner.

California clients will generally benefit from both a will and a revocable trust, Trytten says. The trust allows the decedent’s assets to pass quickly to the chosen heirs, avoiding a lengthy probate procedure and allowing for more privacy. Assets that weren’t accounted for in the trust are covered by a will.

“In estate planning,” Trytten says, “you need a belt and suspenders.”