The holidays are a time for visiting family. For some people, this is an excellent opportunity to see long-absent loved ones; for others, it’s a good excuse to make inroads on their alcohol supply. Personally, I think it’s a convenient time to have estate planning conversations while you are all festive and in the same room. Regardless of where you fall on the spectrum, I would suggest you talk to your relatives about wills and trusts before everyone packs their bags. This could mean (tactfully) inquiring about their plans and wishes or sharing your own. Being transparent before there’s an issue can save everyone a lot of time and headaches down the road. Here are some specific points to talk about:
Does everyone have a will and/or trust? If not, should they?
In California, everyone with a house and/or a child should ideally have a will and a trust. They could get by with just a will if their estate is low value (i.e., under $180,000). A will and trust will make their wishes clear and keep the courts out of their business. But if a relative is on the fence, here are a few circumstances that make a will and/or trust particularly important:
- Complicated/messy estates. If the person has a lot of assets or just a few that will be difficult to deal with (e.g., rental properties), listing the assets (with their locations) and explaining how to deal with them will help everyone out. Blended families also lead to complicated estates, and spelling out how the money will be split can avoid a lot of fighting down the road.
- Minor children or special needs adults. If the person has dependent children, they should state who they want to care for the children if they can’t do so themselves. Otherwise, the courts will have to get involved, and there may be fighting over who should be the guardian. The person should also state if and when the children get their inheritance, unless they’re okay with a minor child getting a big chunk of money at 18 or a special needs child getting money they can’t manage that will disqualify them from government benefits.
- Specific wishes they want to be carried out. If the person has any specific wishes at all (certain items to certain people, terms and conditions for inheriting money, monetary gifts to a person or organization, etc.), they really need a will or trust. Without a will or trust, the Probate Code controls and the Probate Code gives equal distributions to all the person’s legal heirs. There are no special gifts or conditions under the Probate Code.
If they have a will and trust, when was it last updated?
Things change over time. An estate plan that was great ten years ago may not be so great today. If a will or trust is more than five years old, reviewing it to ensure it still reflects the person’s wishes is a good idea. You can read more about when to update a will and trust here.
What are people’s wishes regarding their estates?
This question requires some tact; if asked the wrong way, relatives will think you’re nosy at best and greedy at worst. Some people are more comfortable sharing this information than others, which is something else to keep in mind when raising the question. To avoid ruffling feathers, keep the question broad; you don’t need to know every detail of every relative’s plan. You simply want to know if they plan to do anything unusual so there are no surprises when it’s time to carry out the plan.
Most people split everything equally between their kids, and if the kids are old enough one of them will be in charge of making the distributions. That’s fine, and there’s no problem if that’s the plan. But if they’re looking to make unequal distributions, large gifts of their estate, or something else that could be upsetting, it’s better to let everyone know in advance so they have time to get used to the idea. It will massively cut down the fighting down the road.
If you need help figuring out your estate planning conversations for the holidays (or any other time of year), including what questions to ask, or if you need help creating or updating a will or trust, please feel free to contact me at kaway@kawaylaw.com.
