When it comes to estate planning, there are a number of things that need to be considered. One of the most important aspects is determining who will inherit your assets after you pass away.
Property owners in California are protected and ruled by the state’s laws. In this guide, we’ll take a closer look at one of the laws in particular: the California Inheritance Law. We’ll discuss how it works and provide some tips on how you can plan for succession under this law. Let’s get started!
What is the California Inheritance Law?
The California Inheritance Law is a complex document that outlines the rights of heirs and beneficiaries to an estate. An estate refers to all of the property and assets a person owns at the time of their death. This includes anything from real estate and vehicles to bank accounts and life insurance policies. The legal guidelines within will provide guidance on leaving things behind for your loved ones to inherit as you so desire. Your executor will work with your heirs to distribute your estate according to your wishes after you die.
Who is Eligible to Receive Inheritance Under This Law?
This is a question that many people have when they are faced with the prospect of receiving an inheritance. In most cases, the answer is fairly straightforward – the person who inherits the property is the person who was named in the will or, if there was no will, the person who is closest to the deceased according to California’s laws of intestate succession. However, there are some exceptions to this general rule. Let’s take a closer look at intestate succession and who can receive an inheritance under California law.
The Myriad of Inheritance Situations – Intestate Succession
Most property that is acquired during marriage (besides gifts and inheritances) is considered community property, which means it’s owned jointly by both partners and is divided upon divorce, annulment, or death. Separate property is that which is owned by only one spouse.
Unless you have a will, you are bound by the California Intestate Succession Law and your property will be distributed, based on whichever one of these following scenarios applies to you and your loved ones:
Spouses, Children and Parents
A surviving spouse is the first to be eligible to receive an inheritance under the California Inheritance Law. This includes all property and assets of the deceased spouse, as well as any income or benefits earned by the deceased spouse during their lifetime. Therefore:
- If there is a spouse but no children, parents or siblings, all community property and separate property would go to the spouse.
- If there is a spouse and either one child or one grandchild, 1/3 of the separate house goes to the spouse and 2/3 of the separate property goes to the child or grandchild.
- If there is a surviving spouse and multiple children, 1/3 of the separate property goes to the spouse and 2/3 of the separate property gets divided amongst all the children.
- If there is a surviving spouse but no children, half of the separate property goes to the spouse and the other half goes to the parents.
- If spouse and siblings but no parents, half of the separate property goes to the spouse and the other half goes to the siblings.
- If there are children but no spouse, all community property and the separate property gets divided evenly amongst the children.
- If parents but no spouse, children or siblings, all community property and separate housing go to the parents.
- If siblings, but no spouse, children or parents, all community property and separate housing goes to the siblings.
Extended Family
If the person who passes away doesn’t have a spouse, children or parents, the order of inheritance becomes: aunts and uncles; nieces and nephews; grandparents; great aunts and uncles; cousins and then the children, parents and siblings of a spouse who passed away first.
Exceptions to the Rule: Step Family
California intestacy law only considers biological and adopted children as legal heirs. You will want to create a will, making your wishes clear in order to ensure that your stepchildren and/or stepparents have rights to your estate after you pass away. According to the specifics of the law, you would otherwise need “clear and convincing evidence” to try and prove that the stepparent surely would have adopted the stepchild “but for a legal barrier.”
If you are an heir or beneficiary, it’s important to understand how the law affects you. If you have any questions about the law or your specific case, it’s best to consult with an experienced estate planning attorney.
Do You have to Pay Taxes on Your Inheritance?
The current state of inheritance law in California, right now in 2022, is such that there are no taxes on estates or transfers. This should be a big relief to hear for those who might want to pass their property down, as it will not add any extra hassles with paperwork and formalities in doing so. In fact, an individual can leave up to $12.06 million to heirs without owing any federal estate or gift tax. A married couple can transfer up to $24.12 million, and have it be completely untouched by taxes.
When Do You Need to Create a Will?
If you live in California and you have certain property such as real estate, vehicles, bank accounts and life insurance policies, that you would like to pass to someone, specifically, when you die, you will want to create a will.
The largest and most common mistake in estate planning is failing to get your wishes into writing at all. It’s easy to put off, but if left unchecked, the consequences could be devastating for all those involved; i.e. your loved ones, some of which may be expecting a certain inheritance at the time of your passing based on verbal agreements.
It is important to create your will as soon as possible, because, if you die unexpectedly, the California law will take effect and, without a will, your loved one(s) may not receive the inheritance you intended for them. The laws surrounding inheritance are complex. Working with an experienced estate planning attorney can help ensure that your wishes are carried out exactly as you want them to, after your death.
How to Create a Will in California
If you live in California and want to make a will, there are a couple things you should know. First, wills must be in writing and signed by the person making the will (the testator). Second, wills must be witnessed by two people who are not beneficiaries of the will.
Anyone over the age of 18 can make a will and you don’t need to have a lawyer draw up your will-you can do it yourself. Here is how to make a will:
- Decide what property to include in your will.
- Decide who will inherit your property.
- Choose an executor to handle your estate.
- Choose a guardian for your children.
- Choose someone to manage children’s property.
- Make your will, in which you state what to do with your property, you can plan for incapacity and make known your preferences for Burial/Cremation.
- Keep your documents updated regularly
- Sign your will in front of witnesses.
- Store your will safely.
Certain property is exempt from being included in a will. It is always wise to have a professional estate attorney look your will over for any possible unforeseen issues.
No one likes to think about death, but it’s important to have a plan in place for the inevitable. By planning ahead, you can make sure your loved ones are taken care of and your estate is distributed according to your wishes.
What are Some of the Most Common Disputes that Arise?
Under the California Inheritance Law, disputes may arise between heirs over the distribution of assets. Though most cases can be resolved through negotiation and mediation, there are a few that make it to court.
The two most common types of estate-related disputes we see are will contests and trust disagreements. Very often, these matters can have a significant financial impact on those involved and are often about more than just money or property – they involve people’s deepest emotions and relationships. By understanding these dynamics, you can take steps to avoid will contests and rebuild trust after a disagreement.
While it is possible to contest a will or challenge an inheritance in California, doing so can be difficult and expensive. It’s critical that you find highly qualified legal counsel to represent your interests in this type of litigation maneuvering as best suits them going forward.
Can You Refuse an Inheritance?
Yes, you can refuse an inheritance. The technical term for disclaiming is “disclaiming” and it’s important to understand the effect of your refusal on how your property will be treated after death—known as a “qualified disclaimer.” To qualify a federal or state law under this section, there are strict requirements that must be followed which includes, not just saying ‘no,’ but also providing a good reason why through explanation or other means such as signing papers agreeing not claim any rights over these assets during one’s lifetime.
Are You The Rightful Heir of a Property You Don’t Want?
You can decline an inheritance, as mentioned, or you can sell it and pocket the cash. It’s yours now, you can do anything you like with it. Selling might sound like a pain, especially if it is a piece of real estate you can’t use or don’t have the time or money to fix it up and sell it the traditional route. But that’s where we here at Osborne Homes can be helpful to you. We buy homes in as-is condition and we pay all cash. Closing happens fast and you get your cash quickly. If you need to get rid of a California property that you inherited and do not want, call or text us at 559-500-3610
