Where There’s a Way, There’s a Will

Legally, it could happen. The Legislature could abolish the right to make a will. Bernard Witkin, an authority on California law, explained it this way in a law treatise: “The rights of inheritance and testamentary disposition are wholly statutory and subject to legislative control to any extent, and the Legislature could abolish the rights altogether.”

In fact, there was a time, hundreds of years ago, when there was no such thing as a will. The Statute of Wills, enacted in England in 1540, first brought this concept into the legal system.

Of course, nobody has to have a will. No law compels a person to write a will. Nobody can force you to do a little estate planning. Your potential heirs cannot properly bring a lawsuit to make you have a will.

And wills are not the only estate-planning technique. There are a number of alternatives, many of which have been mentioned in this column in the past. But let’s take a quick review of the possibilities:

* Do Nothing. Let nature take its course. Die intestate. That’s the word lawyers use for someone having died without a will. State statutes take over. The court decides who gets what and who becomes the guardian of your minor children, based on guidelines set forth in the statutes. (There seems to be a popular misconception that the state will get your money, but that would be the case only if you left absolutely no family, not even a distant cousin.)

* Write a will. There are several kinds: simple wills, and wills with trusts. A holographic will, dated and entirely in your own handwriting, is enforceable. There is also a “statutory will,” a fill-in-the-blanks form adopted by California in 1982. Actually, there are two forms: one with a trust, one without a trust. (The State Bar will send you the form for $1. Send a stamped, self-addressed business-size envelope--39 cents postage--to: State Bar of California--Wills, P.O. Box 411, San Francisco, Calif. 94101. Some stores sell the forms.)

You can even use a computer program to write a will. Nolo Press publishes a book that includes the software and a detailed guide. For more information, call Nolo at (800) 445-6656.

* Life insurance and annuities. (A better name would be insurance payable on death, not life insurance.) This is a contract with an insurance company. You decide who is the beneficiary, that is who gets the proceeds. The amount is included in your estate valuation for federal tax purposes.

* Trusts created during your lifetime. (A trust can also be created upon your death as part of the instructions in a will.) There are all sorts of trusts, many used for tax-planning purposes, but they basically fall into two categories: revocable trusts and irrevocable trusts. Revocable trusts can be changed during your lifetime. Irrevocable trusts can’t be changed. The former are commonly prepared so that they become irrevocable after death. The so-called “living trust” that you see frequently advertised is one form of a revocable trust.

* Joint tenancy with right of survivorship. The survivor receives the property without going through probate. But property held in joint tenancy must be held equally; if there are two owners, they each own 50%. And changing property you own individually to joint tenancy during your lifetime may have gift tax consequences.

* Bank accounts that pay on death. This is a quick and easy way to make sure that specific savings accounts go to the person you want to get it; it also avoids probate.

* Gifts under the Gifts to Minors Act. This is a way to set aside money for a minor. An adult custodian is named--one parent is usually picked--to administer the funds until the minor turns 21.

* Outright gifts. There is virtually no legal limitation on the right of a person to give away property during his or her lifetime. Two exceptions come to mind. A gift of community property requires that both spouses participate. And you can’t give away so much that there is not enough left to pay creditors. That can create potential problems. Gifts are not always tax-free. The recipient must pay tax on any gift in excess of $10,000 received from one individual.

Does this all sound too complicated? There seem to be so many possibilities. You have the right to do some or all of these, or nothing at all. But remember that whatever you do may have serious legal and/or tax consequences. No decision concerning your estate should be made lightly, and only after you’ve fully educated yourself on each of the possibilities.