What assets are controlled by a will in California

I recently spoke with a client, David, who discovered a codicil to his mother’s will was improperly executed – signed a day after she’d already been declared incapacitated. The cost? Over $30,000 in legal fees just to untangle the situation and petition the court to validate the document, a process that could have been avoided with careful planning and proper execution.

What Happens to Assets Without a Beneficiary Designation?

Most people assume a will governs everything they own. That’s a dangerous misconception. A California will—even a meticulously drafted one—only controls assets that don’t have a designated beneficiary or a pre-determined method of transfer. This is where things get tricky. Think of your will as the “catch-all” document, covering what’s left over after everything else is accounted for.

What Assets Pass Outside of Probate (and Your Will)?

A significant portion of your estate likely bypasses your will entirely. Here’s a breakdown of common assets that pass directly to designated beneficiaries or through other legal mechanisms:

• Real Property with Joint Ownership: Property held in joint tenancy with right of survivorship automatically transfers to the surviving joint tenant(s), regardless of what your will states.
• Payable-on-Death (POD) Accounts: Bank accounts, brokerage accounts, and even some insurance policies designated “POD” or “Beneficiary” pass directly to the named recipient.
• Retirement Accounts: IRAs, 401(k)s, and other qualified retirement plans are generally controlled by beneficiary designations.
• Life Insurance: The death benefit goes directly to the beneficiaries listed on the policy.
• Trusts: Assets held in a properly funded Revocable Living Trust are distributed according to the trust’s terms, not your will.
• Community Property: In California, community property (assets acquired during marriage) often has specific transfer rules.

What Assets Are Controlled by Your Will?

Typically, the assets subject to your will—and ultimately requiring probate—include:

• Solely Owned Real Estate: If you own a home or other real property solely in your name, it will likely be distributed through your will. However, for deaths on or after April 1, 2025, a primary residence valued up to $750,000 qualifies for a “Petition for Succession” under AB 2016 (Probate Code § 13151). This is a Petition, requiring a Judge’s Order, and is different than the Small Estate Affidavit (for real property under $69,625). To qualify, your other non-real estate assets generally must remain below the separate $208,850 Small Estate limit.
• Personal Property: This includes tangible items like furniture, jewelry, artwork, and vehicles.
• Cash and Bank Accounts (without POD): Any cash or bank accounts without a designated beneficiary will be subject to probate. If combined ‘probate assets’ (excluding the AB 2016 residence) exceed $208,850 (the threshold effective April 1, 2025), they are subject to formal probate; a Will alone does not allow you to bypass this limit.
• Business Interests (LLCs/Corporations): Ownership interests in businesses, especially LLCs, may be governed by your will unless there are separate operating agreements in place. As of March 2025, domestic U.S. LLCs are exempt from mandatory BOI reporting under the Corporate Transparency Act; however, executors managing foreign-registered entities must still file updates within 30 days to avoid fines of $500/day.
• Digital Assets: Without specific RUFADAA language (Probate Code § 870) in your Trust or Will, service providers like Coinbase and Google can legally deny your executor access to your digital assets.

The CPA Advantage: Beyond Just Estate Planning

As an Estate Planning Attorney and CPA with over 35 years of experience, I bring a unique perspective to my clients’ situations. It’s not just about transferring assets; it’s about minimizing tax implications. Understanding the potential for a “step-up in basis” for appreciated assets – crucial for capital gains purposes – requires a tax professional’s expertise. Proper valuation of business interests and real estate is also critical, and I’m uniquely qualified to handle those complexities in-house.

Protecting Your Legacy with Proactive Planning

Don’t fall into the trap of thinking your will covers everything. A comprehensive estate plan should include beneficiary designations, trusts, and careful consideration of how assets are titled. Failing to do so can result in unnecessary probate costs, delays, and, as I saw with David’s mother, significant legal fees. It’s about more than just distributing your possessions; it’s about protecting your family and ensuring your wishes are carried out efficiently and effectively.

Under Prop 19, heirs can only keep a parent’s low property tax base if they move into the home as their primary residence within one year and the home’s value is within specific limits.

Furthermore, the 2026 ‘Sunset’ was averted by the OBBBA, which permanently increased the Federal Estate Tax Exemption to $15 million per person effective Jan 1, 2026.

What makes a California will legally enforceable when it matters most?

In California, a last will and testament operates within a probate system that emphasizes intent, clarity, and procedural compliance. When properly drafted, a will does more than distribute property—it creates legally enforceable instructions that guide courts, fiduciaries, and beneficiaries through administration with fewer disputes and less uncertainty.

To create a valid document, you must ensure the signer has testamentary capacity, strictly follow will legal requirements, and ensure you are correctly identifying the will maker to prevent identity disputes.

When a will is drafted with California probate review in mind, it becomes a stabilizing roadmap rather than a source of conflict. Clear intent, proper authority, and compliant execution protect both families and estates.

Resources for Asset Management & Transfer

• Property Tax Reassessment: California State Board of Equalization (Prop 19)
  This page details the “Base Year Value Transfer” rules. It explains that heirs can only avoid a property tax reassessment if the inherited home becomes their primary residence and the Homeowners’ Exemption is filed within one year of the date of death.
• Real Estate Probate (AB 2016): California Probate Code § 13151 (Petition for Succession)
  The specific statute for the AB 2016 process. It outlines the requirements for using a court-approved “Petition” (not an affidavit) to transfer a primary residence worth $750,000 or less (gross value) for deaths occurring after April 1, 2025.
• Small Estate Affidavit: California Probate Code § 13100 (Personal Property)
  Access the statutory language for the “Small Estate Affidavit.” This procedure is strictly for Personal Property (cash, stocks, vehicles) and is limited to estates with a total value of $208,850 or less (effective April 1, 2025).
• Federal Estate Tax Exemption: IRS Estate Tax Guidelines
  The authoritative federal resource for estate valuation. It reflects the 2026 exemption increase to $15 million per person, which is critical for high-net-worth asset planning and determining if an IRS Form 706 is required.
• Unclaimed Assets: California State Controller – Unclaimed Property
  The primary portal for executors and heirs to search for “lost” assets—such as forgotten bank accounts, uncashed dividends, and insurance benefits—that have been remitted to the State of California for safekeeping.
• Business/LLC Compliance: FinCEN – Beneficial Ownership Information (BOI)
  The official portal for corporate transparency reporting. Most domestic and foreign entities (LLCs, Corps) must file a report. Executors must verify compliance, as failure to update control information within 30 days of death can result in federal civil penalties.