Holographic Wills

Dear Len & Rosie,

I am unmarried, I have no kids. I own a home and a vacation rental. I have written a will in case I die unexpectedly. Does a will have to be witnessed? If not, is it completely invalid? Do I need an attorney to hold onto the will to make sure that it is implemented? Is there any difference between having an attorney implement a will and having a brother or sister implement the will?

Burt

Dear Burt,

You may create your own holographic will that doesn’t have to be witnessed. All you have to do is to write out your wishes in your own hand, and sign and date your will. If you type out the will on a computer or typewriter, or someone else writes it for you, then to be valid you must sign your will before two adult witnesses, neither of whom may inherit from you upon your death.

But you get what you pay for. After your death, your heirs will experience the joy of probate. If the gross value of your estate, before your debts are subtracted, is worth $1,000,000, then your heirs will delight in the fact that a lucky probate lawyer will earn statutory probate fees of $23,000. The executor you named in your will, if you named one, gets another $23,000 unless he or she waives fees. If your estate is worth $1,500,000, the lawyer and executor each get an extra $5,000 for precisely the same amount of work. There may be extraordinary fees for extra services such as selling your home and vacation property. And to put the icing on the cake, your heirs will learn new lessons in patience while waiting out the typical 9-15 months it takes to complete a probate. Look at all the time and money you saved by doing a simple holographic will.

Of course that’s assuming that the person who found the will hidden beneath your mattress didn’t make it disappear so he or she could inherit more from you under your previous will or by intestate succession (the law about who gets what when someone dies without a will). There’s a good reason why many lawyers keep their clients’ original wills for safekeeping.

Yes you can your own estate planning, but how would you even know that your home made holographic will does what you want it to do? How would you know that your plan is what you really need? There are many things you may not know how to deal with in an estate plan such as restrictions against gifts to caregivers, spendthrift heirs who are bankrupt or owe back child support, Special Needs Trusts for disabled beneficiaries, Medi-Cal estate recovery claims, Estate Taxes and Generation Skipping Transfer Tax, Proposition 13, and IRA beneficiary designations, to name a few.

That’s why we hesitate to tell anyone that they can create their own will, or even a trust to avoid probate, and expect everything to turn out the way they expect. It’s like setting a broken bone. Sure, a boy scout could do it in a pinch, but you’d prefer a physician. Experienced trusts and estates attorneys do a lot more than filing out forms. They know what questions to ask and the best way to translate a client’s desires into an estate plan that’ll work.

Len & Rosie

The Simplicity of Joint Tenancy and No Will

Dear Len & Rosie,

My husband of 30 years recently passed away without a will. Our home is in joint tenancy, so I know that an affidavit of death of joint tenant should be recorded with the County Recorder. Our cars were titled both our names, and all our bank accounts were also joint tenancies. Other than a small IRA, of which I am listed as the beneficiary, everything was in both of our names. As I see it, all of our assets now will pass to me and there is simply no estate to probate. Or am I over-simplifying things?

Susan

Dear Susan,

Everything you wrote is pretty much correct, but you are only half way there. You should obtain date-of-death values for any non-IRA securities you own, and you may want to have your home appraised, to establish the new cost basis for your assets. But what’s going to happen when you die? If your husband died without a will, you probably don’t have an estate plan of your own. Get one.

If you die without a will, your children, if you have any, will inherit your estate in equal shares by intestate succession. But what if they die before you? Your estate could fall into the hands of minor or spendthrift grandchildren who may not be responsible enough to manage an inheritance. Even worse, if a disabled child or grandchild inherits from you, he or she may lose eligibility for Social Security and Medi-Cal benefits unless the inheritance is held within a Special Needs Trust.

At the very least you should have a will that spells out how your estate is to be divided, a durable general power of attorney for financial decisions, and an advance health care directive so the loved ones you pick can make important medical decisions on your behalf if you become incapacitated.

But what you really ought to do is to create a revocable trust to avoid probate. If your estate is worth, $600,000 upon your death, then a happy lawyer will earn $15,000 in statutory probate lawyer fees. If you are worth $1,000,000, an even happier lawyer will earn a base fee of $23,000, for exactly the same amount of work. If your home is held within a trust upon your death, it won’t be subject to probate, and the legal and administrative expenses of distributing your assets to your children will be much less.

Now you may be thinking, why not avoid probate by putting my home into joint tenancy with my children? Don’t do this. Your children may not give it back if you ask for it and your home would become subject to the claims of their creditors. A revocable trust will allow your assets to avoid probate on your death while keeping you in charge for as long as you want.

Finally, don’t forget your IRA. You should roll over your husband’s IRA to one of your own. Just don’t forget to name your children as your IRA beneficiaries. If you forget and your IRA pays into your estate when you pass, then the IRA must be cashed in within five years of your death and your children will lose the opportunity to stretch out IRA distributions over their own lifetimes.

Len & Rosie