There are no estate or inheritance taxes in California. California inheritance laws, especially when there isn’t a valid will in place, can get a bit convoluted. So if you’d rather have your will and inheritance plans built with the help of a financial advisor, the SmartAdvisor tool will match you with advisors in your area.
Does California Have an Inheritance Tax or Estate Tax?
Although California doesn’t impose its own state taxes, there are some other taxes you’ll need to file on behalf of the deceased:
- Final individual federal and state income tax returns – due by tax day of the year following the individual’s death
- Federal estate tax return – due nine months after the individual’s death, though an automatic six-month extension is available if asked for prior to the conclusion of the nine-month period
- This is required only of individual estates that exceed a gross asset and prior taxable gift value of $11.4 million
- Federal estate/trust income tax return – due by April 15 of the year following the individual’s death
An employer identification number (EIN) will represent your estate with the IRS and must be applied for prior to filing any of the above returns. You do be this online, by fax or via mail.
Dying With a Will in California
If you pass away with a valid will to your name, its execution is usually fairly simple, provided that you, possibly with the help of a lawyer or financial advisor, included all the necessary elements. Aside from listing the beneficiaries that you’d like specific property to be left to, a valid will consists of an executor/personal representative and a guardian for any of your children under the age of 18. If all of these requirements are checked off, your will is considered testate by the state.
Valid testate wills have explicit directions as to how the executor should administer the estate’s property. But it’s the size of the will that determines just how involved the court will be. In California, an estate worth at least $150,000 must, by law, open a probate case with the court, according to California inheritance laws. The value of an estate is determined by the value of any life insurance or retirement benefits paid to it as well as its real and personal property on the day of the individual’s death. The state forces probate not only so the sometimes complex nature of a will can be handled in a timely manner, but also to be sure that the decedent’s wishes are carried out in full.
Lengthy court proceedings are avoidable for any estates that are worth less than $150,000, though. As long as it has been 40 days or longer since the deceased has passed away, California will allow you to file an Affidavit for Transfer of Personal Property. Before you use the affidavit, make sure to have it notarized and to include with it a copy of the deceased’s death certificate, proof of identity for you and the deceased and the signatures of other heirs (if there are any). Once all of this paperwork is together, you can hand it to the individual, bank or company that currently possesses the property.
Dying Without a Will in California
Passing away without a will can lead to many complications when your case gets to probate court, according to California inheritance laws. Legally speaking, California will refer to you and your estate as intestate in this situation, leaving the heir-choosing process up to the state’s intestate succession laws. Depending on who has survived you, your estate could be divided up among your spouse, children, parents, grandparents, siblings, cousins, aunts, uncles, nieces and nephews.
The intestate process isn’t only for individuals without a will. It applies to anyone without a valid will, too, meaning that the court has not accepted it under the law, a fact that can come to fruition even when the decedent is already gone. Also, to be an heir under California intestate succession laws, a person must have outlived the decedent by a minimum of 120 hours. If that stipulation is not met, the heir’s estate will not receive the inheritance.
The majority of California inheritance laws are in place to protect and manage the estates of individuals who have died intestate. While the court works out how the estate will be divvied up, a state appointed executor will physically enact the court’s rulings, take care of any estate expenses and pay off all outstanding liabilities.
Community Property in California Inheritance Laws
California is a community property state, which is a policy that only applies to spouses and domestic partners. This means that all property a couple receives during marriage becomes joint property. More specifically, each person becomes the owner of half of their community property, but also half of their collective debt, according to California inheritance laws.
The only property that doesn’t become community property automatically are gifts and inheritances that one spouse receives. However, if these finances are commingled into a joint account for some time, the court may declare that it’s impossible to track what belongs to whom, therefore making it community property.
Quasi-community property is what California calls any property that you obtained prior to your residency in the Golden State. It is treated essentially the same as traditional community property.
Separate Property in California Inheritance Laws
On the other hand, separate property is property that came into your possession either before a marriage or following a divorce. But separate property is divided into two subsections: real and personal property. Real property is any land you might own, as well as anything that is “affixed” to it, such as a home. By contrast, personal property basically covers anything else that is “movable.”
Spouses in California Inheritance Laws
Surviving spouses and domestic partners of intestate individuals will find that they are entitled to a solid portion of their deceased spouse’s property, according to California inheritance laws. In fact, if a decedent dies without any surviving biological or adopted children, parents or siblings, their spouse will receive all community, quasi-community and separate property. In situations with a will, a decedent can build into their will that their half of the community property go to someone else, though.
However, your spouse is given all of your community and quasi-community property, but only half of your separate property, if you left behind a single surviving child. The same occurs even if there are no surviving children, so long as you’re leaving behind at least one parent and/or sibling. Depending on which fits your situation, the second half of your separate property will go to either your siblings, parents, children or grandchildren.
A spouse’s cut of the intestate estate will fall to just one-third if you’ve left surviving children or grandchildren in any of the following situations, according to California inheritance laws:
- There is more than one surviving child of the decedent
- There is one surviving child of the decedent, along with a surviving grandchild of at least one deceased child
- There are surviving grandchildren of at least two deceased children
Aside from some states like Texas, California does not recognize common law marriages as legitimate for its residents. However, if you’ve received a common law marriage in another state or nation, California may recognize it and your pursuant inheritance rights. These matters are not guaranteed, though, and are ultimately left up to the courts.
Children in California Inheritance Laws
Before getting into the specific laws that surround the inheritances of children in California, it’s important to know how the state qualifies who is and isn’t an individual’s child, even if it might seem obvious. First and foremost, biological children have the strongest rights, as they are the direct bloodline of the decedent. Adopted children share this claim, while grandchildren don’t, provided their parent (the decedent’s child) is alive.
As far as husbands are concerned, the state of California assumes that any child born to their wife or domestic partner while they’re still engaged in a relationship is their child as well. This gives such a child automatic inheritance rights even if he or she is found not to be the decedent’s child biologically, provided it’s proven the decedent treated the child as his own. The same applies to illegitimate children, though the same burden of proof falls on them.
If you conceived a child and die prior to its birth, the child will retain rights of inheritance over your estate. Also, should a child be conceived via your stored genetic material within two years of your death, it will earn a portion of your estate if you gave consent for the material to be used for the purposes of conception.
Similar to spouses, children often maintain strong rights to their parents’ intestate estates. If you have children but are not married at the time of your death, your children will split all your separate property, as unmarried individuals do not have community or quasi-community property. But if your spouse and children both survive you, your children are entitled to two-thirds of your separate property, as all community property will end up with your spouse. Should you leave just one surviving child or a grandchild of a deceased child, their share of your estate will drop to just half.
|Intestate Succession: Spouses, Children & Extended Family|
|Inheritance Situation||Who Inherits Your Property|
|– If spouse, but no children, parents or siblings||– All community property and separate property to spouse|
|– If children, but no spouse||– All community property and separate property to children|
|– If spouse and children||– Decedent’s share of community property to spouse |
– 1/3 or 1/2 of separate property to spouse
– Balance of separate property to child or children
|– If spouse and parents, but no children||– Decedent’s share of community property to spouse |
– 1/2 of separate property to spouse
– Balance of separate property to parents
|– If parents, but no spouse, children and siblings||– All community property and separate property to parents|
|– If spouse and siblings, but no parents||– Decedent’s share of community property to spouse |
– 1/2 of separate property to spouse
– Balance of separate property to siblings
|– If siblings, but no spouse, children and parents||– All community property and separate property to siblings|
Stepchildren’s Inheritance Rights in California
Stepchildren do not have any inherent legal right to their stepparent’s intestate estate. There is, however, one loophole to this law. If a stepparent was in the stepchild’s life from his or her childhood on and the court finds that there is convincing evidence that the deceased would have adopted his or her stepchild if it weren’t for a legal hold-up, then the stepchild will be included in the intestate process. This policy also applies to foster children, according to California inheritance laws.
Individuals Without Relatives in California Inheritance Laws
While it is possible for the state of California to end up with your estate, it’s unlikely to happen. Its laws were deliberately built to exhaust every possible familial connection you might have prior to utilizing this last resort. So your estate won’t end up in the state’s hands, unless all of the following relatives are deceased: spouse, children, siblings, parents, aunts, uncles, nieces, nephews, grandparents, great aunts, great uncles, cousins or children, parents and siblings of a spouse who died before you.
Non-Probate California Inheritances
Wills are meant to manage a decedent’s property as completely as possible, but there are some accounts that don’t go through the typical probate or inheritance processes. As a blanket statement, any accounts that have a beneficiary will usually fall into this category.
These are most commonly life insurance policies and leftover 401(k)s, IRAs and other retirement accounts. For these, logistics are pretty straightforward — the beneficiary that you list on the account/policy will receive the funds within. You can choose to name your estate as the beneficiary, which will officially add the assets therein into your estate.
Other accounts that fall into this category include pay-on-death investment accounts, revocable living trusts, community property with right of survivorship and joint tenant assets with right of survivorship.
Other Situations in California Inheritance Law
California state will only end up in possession of your estate if you have literally no family left to inherit it. Because its inheritance laws are meant to turn over every stone in the search of a relative, this often doesn’t actually happen.
Half-relatives are treated by California as full-blooded relatives when it comes to inheritances. So regardless of if you share solely a mother or a father with your half-sibling, you will receive the full rights of a sibling.
If a relative is born following your death, but was conceived while you were still alive, he or she will be afforded rights to inheritance as if born prior to your death. From here, the person’s inheritance rights will be based what his or her familial relation is to you.
Heirs who are not U.S. citizens or are illegal aliens will still be given their appropriate portion of your estate according to California intestate succession laws. The property they ultimately garner is still dependent on their relation to you, just as if they were citizens or legal immigrants, according to California inheritance laws.
As gruesome as it is, California dictates exactly what will happen to your intestate estate if you are purposefully murdered by someone related to you. In this situation, the individual will not receive any of your property, regardless of whether the law dictates that person was entitled to it.
Resources for Estate Planning
Managing the estate of a recently deceased loved one, or even your own, can be much more complicated than expected. In fact, you may end up with taxes to file, possible court proceedings to go through and more, so some professional help may be needed.
The SmartAsset financial advisor matching tool will pair you with three nearby financial advisors that will help to handle your estate and inheritance planning needs. Matches are found based on your answers to a few simple questions, so be as specific as possible when stating what you’re looking to handle in your financial life.
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