What happens to assets upon a death of an individual or last surviving spouse? 

https://www.courts.ca.gov/42629.htm

A. Intestate Succession

    When a person dies without leaving a will or trust, their assets go through probate and California law of intestacy will determine who has the right to claim these assets. Under California intestate succession, the decedent's estate shall go to surviving spouse, children, parents, or siblings of any degree; if none survive, then the estate will pass to the next of kin. In the rare event that no relatives survive, the state will receive your assets. 

For married couples and registered domestic partners, intestate succession may pass assets to unintended beneficiaries, especially where there are children from prior relationships who are not adopted. (Refer to Probate Code Section 6402)

     Probate is a court supervised proceeding to settle and distribute a decedent's estate. It is a costly and lengthy process. Most people desire to avoid probate for these reasons.

B. Assets That Avoid Probate

     In California, a deceased person may avoid formal probate if their assets are less than $184,500 ($369,000 for married couples).  You may reduce your assets by gifting to avoid probate. In addition, title to financial accounts or insurance policies avoid probate by passing to designated beneficiaries. Note: beneficiaries must survive to claim, otherwise the assets may go through probate. Title to real estate will pass to a surviving joint tenant or a surviving spouse if held as community property with right of survivorship.

C. Joint Tenancy and Community Property With Right of Survivorship

     Often times, married couples hold title to real estate in either joint tenancy or community property with right of survivorship. There are pros and cons of holding title in this manner. Joint tenancy will protect the share of one spouse from creditors of the other spouse whereas title in community property will expose community property to the creditors of both spouses. On the death of the first spouse, joint tenancy will only provide a step up in basis of the deceased spouse's share, whereas, title as community property will give the surviving spouse a full step up in basis of the entire property (both halves) upon the death of the first spouse.

     Another issue that often arises is when a parent adds their child to the deed of their house as a joint tenant. Upon the death of the parent, the child will not receive full step up in basis. Rather, the child will receive a step up in basis of the deceased parent's share (half step up). With significant increase in the value of real property, it is always better (tax wise) to let your children inherit the property so they will receive full step up in basis at your death.

Why Use a Will?

     A will may be used to nominate a guardian and create a trust to provide for children. Our comprehensive estate planning trust package includes pour-over wills which provide guardianships if needed.

     Sometimes it is in the best interest of the decedent's estate to have court supervision in transferring assets. This all depends on the decedent's family dynamics. A testamentary will may be best suited for situations where family conflict is inevitable.