The dispositive provisions of your will

Dear Len & Rosie, 

Both my husband and my son have recently died, leaving my daughter and me. My will was drawn up in 1989 so that my children would share equally if anything is left to share. My daughter has no children, but my son had two. Will my son’s children split his share of my estate or must I contact a lawyer and make a new will? Or should I get a trust instead? I want to make sure that my grandchildren get their fair share. 

Clara

Dear Clara,

The answer to your question depends on what exactly your will says. The dispositive provisions of your will (the part of your will that says who gets what when you die), probably say that your children will split your estate into shares by “right of survivorship” or by “right of representation.” These are important phrases that you should understand.

“Right of survivorship” means that each gift will lapse if the person you are giving it to dies before you do. If your son inherits through your 1989 will by right of survivorship, then your daughter will inherit everything when you die and your son’s children will get nothing.

“Right of representation,” which is sometimes also called “per stirpes,” is what you want. If your gift to your son is by right of representation, then his gift will not lapse because he died before you. Rather, it will pass on to his issue, which means his two sons will share one-half of your estate. Your son’s widow will get nothing.

If your will does not specify that your son’s gift is either by right of representation or by right of survivorship, then you ought to have an estate planning attorney look at your will. California has an anti-lapse statute that could pass your son’s half of your estate to his children, but it will not apply if the precise wording of your will shows an intention that your son must survive you to receive a portion of your estate. Your will should also hold your grandchildren’s inheritance in trust until they are mature enough to be responsible with it. Otherwise, your 18-year-old grandson will spend it all on a new car that he can’t afford to insure.

This can get a little bit complicated, so you should rely on the professional opinion of an attorney, instead of trying to figure it out for yourself. You do not want to make mistakes with your will, because you cannot fix them after you are dead.

You should also look into creating a trust. Wills pass through probate in the courts, which is very lucrative for attorneys. If you own a house, or if your estate is worth more than a couple of hundred thousand dollars, then you ought to consider a revocable trust. A trust will cost you more money than a will, but it will save your family time and money after you pass away.

Len & Rosie

Can you make your own trust?

Dear Len & Rosie,

Can I make my own trust? I made up my own will by following the guidelines. I have tried to look up the requirements of filing a trust in California, but I have been unable to find any. I have consulted many publications at the local community college but I have been likewise unsuccessful. Do you know of any publications or forms that I can get to make my own trust?

Sam

Dear Sam,

A will isn’t that hard to create for yourself. You can make a valid holographic will that distributes your estate, as long as you write it out in your own handwriting, and sign and date it. You do not need a witness. If you type out your will, your signature must be witnessed by two adults who will not receive anything from your estate.

People making their own wills may be better off making a California Statutory Form Will. Just search for it on the Internet. You can also download it for free from the State Bar web page at www.calbar.ca.gov under the link for “Will Form”. Or, contact us via www.lentillem.com and we’ll send you the form. Just follow the directions closely. The law does not readily forgive drafting errors.

But you want to make your own trust. Trusts are more complex. Most people do not understand trusts, and their subtleties take a long time to learn. For instance, in your letter, you talked of “filing” a trust. Trusts do not have to be filed or recorded. They are not meant to be public documents.

If you were to make your own trust, you could easily make fundamental mistakes which can render your estate plan unworkable after your death. You should take into account the age of your beneficiaries and their relationships with one another; the size of your estate and the eventual source of money to pay any estate taxes and debts that might be due when you die; disabilities of your children or other beneficiaries; what to do with retirement accounts, survivor’s pensions and deferred annuities; who is trustworthy enough to be successor trustee after your death; and many more issues.

If you still want to make your own trust, there are many books, computer programs, and webpages where you can create an inexpensive trust without a lawyer. Please understand that there is no particular product that we will endorse. We have reviewed many self-made trusts over the years. Most of them omit what we believe to be necessary provisions. If you create your own trust, you should, at the very least, have it reviewed by an attorney.

Finally, do not forget to transfer your assets into your trust so that they will avoid probate on your death. As a rule of thumb, everything should be in the trust except for automobiles, tax deferred accounts such as retirement accounts, annuities and deferred compensation, and it’s always better to keep your checking account out of the trust and add a trusted child to the account so he or she would have immediate access to some funds in the event of an emergency.

Len & Rosie