There are many differences to be aware of when considering a will vs a trust for estate planning. In the following article, we will touch on the various requirements of a will and trust set forth by California statute.
Statutory Authority.
Wills: Cal. Prob. Code §§6100, et. seq. (Division 6)
Trusts: Cal. Prob. Code §§15000, et. seq. (Division 9)
California Will Requirements.
Like most states, California generally requires a last will and testament to be set forth in a written instrument signed by a testator “of sound mind.” While notarization of wills is common, it is not a formal requirement for a valid will in California.
Along with the testator’s signature, a California will must also include signatures of two witnesses who understand that the document is a will. Both witnesses must be competent adults, and they must observe the testator either signing the document or acknowledging that the testator’s signature is genuine.
Disinterested
The witnesses to a will should be “disinterested,” meaning that they have no financial interest in the testator’s estate or in the will itself.
In California, inclusion of a witness who has a stake in the will doesn’t automatically render the entire will invalid—like in some states.
But any bequests to a witnessing party are presumed to have resulted from that witness’s undue influence over the testator.
And, if the net effect of the will is that the witness receives a greater interest in the estate than if the testator had died intestate, bequests to that witness are voidable.
Formalities
An original will that includes all formalities required by California law is assumed to be valid and authentic unless evidence to the contrary is introduced.
To be admissible in probate, a will must be an original document—a photocopy will not suffice.
However, a photocopy of a missing will or a will that has a technical flaw rendering it invalid can sometimes serve as evidence of a decedent’s intent.
Amendment, Revision, and Revocation of California Wills.
Codicils
Modifications to an existing will can be accomplished by executing a codicil, which is a separately executed document supplementing or revising the terms of a will that has already been signed and witnessed.
In California, codicils must meet all required formalities of an original will. Alternatively, a testator can create a new will that satisfies all requirements and is intended to supersede an existing will.
Revocation
California wills can be revoked through either the intentional destruction of the document or by executing a new will that is clearly intended to revoke a prior will.
If a testator is divorced subsequent to the execution of a will, California law assumes that any bequests made to the ex-spouse were automatically revoked by the divorce unless the will states that its terms are not affected by a subsequent divorce.
Holographic and Oral Wills.
California law recognizes “holographic wills” (i.e., wills that are hand-written by the testator) as long as the document is signed by the testator and all relevant provisions are clearly written in handwriting that is demonstrably that of the testator.
Holographic wills do not benefit from the presumption of authenticity that attaches to formal wills meeting all statutory requirements and are therefore more vulnerable to being challenged in probate.
California law does not recognize oral (or “nuncupative”) wills.
California Trust Requirements.
Though commonly used in and associated with estate planning, California trusts can be created for any purpose that is not illegal or contrary to the state’s public policy.
There are two general categories: Revocable vs Irrevocable Trusts.
California differs from some states in that it does not impose the same formalities on the creation of trusts serving as “will substitutes” as are required for standard wills.
To create a valid California trust,
- a settlor must manifest an intent to create a trust (such as by drafting and signing a “declaration of trust”);
- property must be owned by the trust;
- a trust beneficiary must be named (or the trustee must be granted the authority to select beneficiaries); and,
- a trustee must be declared, appointed, or implied by transfer of property to the person as trustee.
In California, a written, signed document creating a trust is only technically required if the trust involves real estate.
However, the vast majority of trusts are formed via an appropriate written instrument designed to avoid ambiguity, miscommunication, and disputes over validity.
For an “oral trust” to be valid, its existence and terms must be established through clear and convincing evidence.
Special Considerations.
Community Property:
Because California is a “community property” state, a married individual’s assets often include a significant amount of marital property jointly owned by the couple.
Upon the death of a married person, his or her interest in property qualifying as marital property automatically transfers to the surviving spouse.
California also recognizes a distinct form of joint ownership called “community property with right of survivorship” that allows married couples and domestic partners to bypass probate.
To simplify and speed up the probate process, California permits direct transfer to a surviving spouse of marital property owned by a married decedent through the use of a “Community Property Form” published by the state government.
The Community Property Form can be used if a married decedent is intestate or if the surviving spouse is the only beneficiary named in a decedent’s will.
Streamlined Probate:
California allows small estates (defined as $150,000 or less in value) to skip some of the normal probate procedures.
Instead of full administration, small estate assets are distributed based on affidavits of heirs and personal-representative acknowledgement, which can significantly cut down on the total cost and time required for administration.
California Statutory Will:
The “California Statutory Will” is a form published by the California legislature and intended as a relatively simple template for creating a valid will.
If completed, executed, and witnessed correctly and in full, a California Statutory Will is considered valid and admissible in probate.
As a fill-in-the-blank form, the Statutory Will can be useful for testators with small, simple estates with little need for customization.
Transfer-on-Death (TOD):
California recognizes TOD designations on both real estate deeds and motor vehicle titles. Ownership of property with a TOD designation automatically transfers to the named beneficiary upon the owner’s death, avoiding the need for probate.
Creating a will or trust does not have to be difficult or intimidating. However, certain circumstances—like second marriages, stepchildren, aging parents, special needs beneficiaries, guardianships, and business interests (to name a few)—can add a layer of complexity and result in unforeseen long-term consequences.
Whenever any out-of-the-ordinary issues are present, it’s a good idea to consult with an experienced attorney familiar with and licensed under the laws of the relevant jurisdiction.
