Navigate California Inheritance Law

Knowing as much as possible about California inheritance law will help take some of the guesswork and confusion out of a complex process. The following guide is designed to offer a comprehensive look at the factors that can have a big impact on how an estate will be handled in the state.

A Brief Definition of California Inheritance Law

Many people might not know exactly what inheritance laws are designed to accomplish. Waiting until a loved one dies will only complicate the matter further, so it is helpful to start with an overview of what the term actually means. In broad terms, an inheritance law is any regulation or statute that sets the parameters regarding how an estate will be divided after a death.

While drafting a will is one way to help direct the division of property and assets, inheritance laws can supersede those desires in some cases. For example, a deceased person’s spouse or children might be able to legally claim a portion of the estate even if they are not expressly entitled to an inheritance in the will.

Of course, these laws can vary significantly from one state to the next, so it is vital to understand exactly how California’s regulations will impact the process.

Estate and Inheritance Taxes

One potentially beneficial aspect of California legislation is that there are no requirements for taxes to be paid on an estate or inheritance. While this makes things a bit less complex than in some other states, there are still several important tax-related factors to remember when dealing with the aftermath of a relative’s death.

While the state government does not collect taxes directly based on the value of an estate or inheritance, there is still a requirement for any estate to file applicable tax returns.

Documents Needed for a Final Tax Return

When preparing a return for a deceased relative, California inheritance law specifies some parameters by which the estate can successfully file the necessary information. For starters, the survivors need to verify their deceased relative’s employer identification number.

As for the documents and tax return forms related to the deceased person’s final year of personal income, the return will generally be due by April 15 of the year after the death occurred. In addition to a personal tax return filed with the state, federal law requires that an estate or trust income tax return be submitted by the same deadline.

Exceptions and Extensions

Although the tax filing process is fairly straightforward for most estates, those with a significant amount of assets might be required to meet some additional demands as stipulated under applicable law. Any personal estate valued at more than $11.4 million must file federal returns within nine months of the death, though it is relatively simple to request and obtain an extension if necessary.

Importance of Drafting a Valid Will

In order to ensure that an estate is divided according to an individual’s personal desires, there is no better step to take than creating a valid will. Not only will these direct assets to go to specific relatives, charities, and other recipients, but it also takes a significant burden off of those loved ones who are left to carry out the deceased’s wishes.

It is important to note that under California inheritance law, there are a few basic requirements for any last will and testament to be considered legally binding. Among the most important pieces of information that must be included are the names of beneficiaries, a guardian for children, and a designated representative tasked with executing the will.

When a Probate Case Is Needed

Now, let’s talk about when is probate required in California. Even with a valid will in place, there are certain circumstances that will require a probate case in order to finalize the distribution of inheritances. Specifically, California law requires such intervention when a deceased person’s estate is estimated to be worth more than $150,000.

That total considers not only physical property such as real estate, but also the value of insurance policies, retirement accounts, and similar assets. In the case of those who die with less than $150,000 in assets, on the other hand, a representative can begin executing the deceased’s will as soon as 40 days after the death.

This process begins when the executor files a specific affidavit and presents it to whichever entity is currently holding the named assets. Upon receipt of a valid form, the bank or other institution is required under state law to turn the property over to the representative to begin dividing the estate according to the terms of the will.

Community Property vs. Separate Property

For the purposes of dividing an estate in California, there are two distinct categories available for classifying all assets and property. Since this is a so-called community property state, there is a relatively straightforward process involved in distributing an estate to a spouse or domestic partner.

Community property is broadly defined as assets that were obtained during a marriage or civil partnership. The same concept also applies to debts incurred during the relationship and, under state law, both individuals own equal shares of both community property and debt.

In the case of inheritances, gifts, and other property given exclusively to one spouse or partner, however, community property rules do not automatically apply even if the asset was distributed during the relationship.

If any such gift is deposited into a joint account, though, a court could determine that it does qualify as community property. There is a subcategory under California inheritance law that is known as quasi-community property and is used to describe property and assets that a couple acquired before moving to the state.

Although the name is different, it is generally treated the same as any other form of community property for the purposes of distributing an estate.

As for all other assets, California law describes it as separate property. This can include any property that was obtained prior to the start of a marriage or domestic partnership as well as property obtained after the dissolution thereof.

Again, there are some specific details that can further specify how such property is treated after a death. One type of separate property is described as real property and includes land, homes, and other structures that are not intended to be moved.

Virtually everything else that falls into this category – automobiles, artwork, etc. – is referred to as personal property.

Distributing Other Assets

In addition to real property, courts must determine how to divide assets such as retirement accounts and insurance policies. Fortunately, the related documents almost always include a section naming a specific beneficiary or multiple beneficiaries.

In some cases, the policy holder can make the estate itself a beneficiary, which will signal that the proceeds will be divided according to a valid will or applicable inheritance laws.

Such assets are known as community property and will generally remain in the possession of the surviving partner. By the same token, any financial obligations that were incurred during the course of the domestic union will be considered community debt and will become the responsibility of the surviving spouse or partner.

It is worth noting that California does not automatically regard common law marriages as equal to traditional marriages. There is a greater likelihood that a court will extend such benefits to a surviving partner if the couple had been granted common law marriage status in a different state or by a foreign government.

Since this is not a guarantee, however, anyone living in such an arrangement should consider creating a legal document that will protect both common law spouses in the event of a death. Otherwise, the division of the estate will be left in the hands of a judge.

Surviving Spouse and Children

For the sake of simplicity, further references to a spouse will also include domestic partners entitled to the same benefits upon an individual’s death. When there are no children involved, the spouse will receive all assets determined to be community property.

For cases involving one or more children, however, the court will step in to divide the estate evenly. When there is one child to consider and no will in place, both the spouse and child will receive equal portions – or one half each – of the estate.

Additional children will generally mean that each child’s share to the community property will decrease. The surviving spouse will typically receive one-third of such assets when there are two or more children involved in the process. The remaining two-thirds will be divided equally between all of the children.

Surviving Children

When someone dies in California without a will and leaves behind children but no spouse, a court will generally order that the children will inherit all assets from the deceased individual’s estate.

Surviving Spouse and Parents or Siblings

When an individual without a will dies, leaving behind a spouse and parents but no children, the spouse receives all of the community property and one-half of all separate property. The remaining separate property will be divided evenly between the spouse and surviving parents. An estate is similarly divided between a deceased individual’s spouse and siblings when there are no surviving parents or children to consider. Under California law, half-siblings are entitled to the same inheritance considerations as full siblings.

Other Common Situations

The primary reason that deciding how to handle an estate without a will is so complex relates to the fact that there are so many unique circumstances that can arise in response to any death. While the sections above cover many of the most common situations, there are many others that courts must deal with on a fairly regular basis. Generally speaking, California inheritance law will require a court to divide estates based on the closest surviving relatives as follows.

If the deceased:

• leaves behind only siblings, the surviving siblings will inherit equal portions of the estate.
• leaves behind a spouse and a grandchild or grandchildren born to a deceased child, the spouse receives all community property and one-third of separate property, leaving the remaining two-thirds of separate property to be divided among grandchildren.
• leaves behind only parents, the surviving parents will receive the entire estate.

There are many other inheritance scenarios that require a court’s ruling to settle, including when a deceased person leaves behind no immediate relatives.

Dividing an Estate Among Other Relatives

When someone dies without a surviving spouse, child, parent, or sibling, California inheritance law stipulates that the inheritance goes first to aunts and uncles. If there are none, the court will look for any nieces and nephews.

From there, surviving grandparents will receive the inheritance. Next in line are great aunts and great uncles, followed by cousins. Finally, the close relatives of a predeceased spouse will have a legal claim to the inheritance if no other relatives can be located.

Intestate Succession

When a resident of California dies without a will, the individual’s estate will be divided according to intestate succession, which is a term used to describe the process by which a court uses applicable laws to determine who is entitled to what share of an inheritance.

While most forms of property that were exclusively owned by the deceased individual are subject to intestate succession rules, there are many important exceptions. Any type of asset that would not otherwise be addressed in a typical will are typically not distributed through intestate succession. Such possessions include, but are not limited to:

• Benefits from a life insurance policy
• Funds collected in a retirement account
• Bank account balances and securities designed to be paid upon death
• Vehicle registrations designed to be transferred upon death
• Any property listed in a living trust
• Assets co-owned with another individual

Any of these exceptions to intestate succession laws will still be delivered to the appropriate beneficiary regardless of whether the deceased individual specified those wishes in a will.

Defining the Inheritance Rights of Children

Since there are many types of blended families and unique circumstances related to parenting, courts must make specific determinations regarding how children are defined under the law. For example, any child born during the course of a marriage is entitled to an inheritance regardless of whether the deceased individual is a biological parent.

Additionally, if a child is born after the parent’s death but conceived while the individual was still alive, he or she will be entitled to the same share of an estate as any other child. Furthermore, if an individual grants permission of biological material to be stored for future use and a child is conceived using that material within two years of the individual’s death, the child will also receive an inheritance under state law.

Notable Exceptions

Just because a minor is being cared for by an adult does not automatically mean that the child will receive a portion of an inheritance if the guardian dies without a will. This is especially relevant in the case of foster children and stepchildren.

Under most circumstances, these individuals are not entitled to an inheritance if they were not legally adopted by the deceased. Nevertheless, there are some ways for a foster child or stepchild to prove that there was a sufficient relationship with the deceased to warrant a share of the estate.

The court will consider whether the guardianship was long-lasting and began with the foster child or stepchild was a minor. Furthermore, if the court concludes that the deceased would have adopted the child if it had been feasible to do so, it is possible for the child to make a successful claim for a share of the estate.

On the other hand, if a deceased person’s biological child was legally adopted by someone other than a spouse, that child will not be entitled to an inheritance.

When Grandchildren Can Receive an Inheritance?

Under typical circumstances, a deceased person’s grandchildren will not receive an inheritance unless specified in a will. If the grandchild’s parent is also deceased and therefore unable to claim an inheritance, however, the grandchild will be able to collect a share of the estate.

What Happens When the State Finds No Relatives?

In a small number of cases, there are simply no relatives to be found who might qualify for an inheritance. When this happens, the state can begin the escheatment process, which basically means that the assets will be kept by the state.

With such a long list of possible heirs, however, most deceased individuals have a distant relative who can make a legal claim to a share of the estate. Before a state takes ownership of a deceased person’s assets, the law stipulates that officials must perform as much research as possible in their effort to find a rightful recipient of the inheritance.

Excluding Certain Individuals

In rare cases, people who would otherwise be entitled to an inheritance can be prohibited from collecting their share. Although uncommon, the most notable example occurs when the deceased individual is murdered by a close relative, which prohibits the killer from making any claim of inheritance.

In almost every other situation, however, a court will distribute portions of an estate as described above. Even if a relative is residing in California without proper immigration documents, he or she is still entitled to the appropriate share of an inheritance.

Simply Writing a Will Is Not Enough

To avoid the confusion and delays that come with allowing a court to divide up an estate in accordance with state inheritance laws, any California resident can create a legally binding will to explain how all assets should be distributed to living heirs. It is important to note that not every will is designed to stand up in court.

If the document does not meet all of the requirements dictated under the law, it will not serve as a valid representation of the deceased individual’s desires and the estate will be subject to intestate succession. Since it is often after a death that would-be heirs learn that a will is not accepted by the court, it is always a smart idea to consult with legal experts who can address all crucial aspects of the process.

Final Thoughts

As evidenced by the various exceptions, restrictions, and regulations included in this guide, there is nothing simple about figuring out how an estate should be divided after an individual’s death when there is no will or similar legally binding plan in place. Although death might be a topic that is uncomfortable to address head-on, there are clear benefits associated with making one’s desires clear.

If you are unsure about which step to take first, there are experts available to help you understand all the variables and make an informed decision. Make a call to WGS Law today and schedule a consultation via Zoom to learn exactly how you can protect your estate and your loved ones by creating a will or trust.

We hope you found our California Inheritance Law Guide helpful! Please contact the experienced team at WGS Law to receive legal advice.

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