Making a new Will is probably the last thing on the mind of someone investing in or moving to California from outside the United States. Taking a look at your Will can usually wait, but it is important to have it reviewed by a California lawyer.
A Will drafted according to the laws of another country may have unintended consequences when applied in the US. If you do not have a Will at all, making a Will would ensure that your assets pass as you intend. Without a Will, the beneficiaries of your estate might differ under California law versus the law of your home jurisdiction.
Considerations in Changing your Will If you Move to California
The need for a new or updated Will depends on whether you are moving to the US for a few years or indefinitely, or whether you are investing directly in California real estate or some other type of investment.
If you are relocating to California from outside the US, the threshold question is how long you intend to live in the US. If you are on a short-term job assignment and intend to return to your home country in a few years, then an existing Will, drafted in your home country, may serve the purpose. After all, a Will is needed only in the event of death. It would still be a good idea to have the Will reviewed, just in case the unexpected happened while you were living in the US.
If you are making California your new primary home (the legal term is domicile), then a new Will is in order. If you are domiciled in California at death, then the disposition of your worldwide assets will be governed by California law.
A new Will would take California law into account.
Overlooked factors in Updating a Will if You are Investing in California
If you are investing in California from outside the US but not relocating, the type of asset and the investment structure matter. California real estate, purchased in your individual name, is the most significant. At your death, if you were the sole owner of the property, a proceeding in the California probate court would be necessary to pass title to your intended beneficiaries.
A will drafted in your home country should work, but it should be reviewed by California counsel. An alternative would be to have a second Will, governed by California law, that applied only to your California real estate. A second Will must be coordinated carefully with the Will of the home country.
If the asset involved is cash in the bank, stocks and bonds, a business entity, or an entity that owns real estate, a review by California counsel is less important. Under California law, the law of a deceased person’s domicile governs the disposition of intangible personal property (all of the assets described in the last sentence). An executor appointed in that jurisdiction would have the authority under California law to deal with such assets. That said, a review of the Will is still a good idea. There may also be reasons to have a separate California Will for such assets, such as anticipated litigation or delays in the home country, or differences in the rights of certain family members.
How to review an Existing Will
A review of an existing Will should cover validity, content, and interpretation. Validity relates to the format of the Will and how it was signed. If a Will was executed in accordance with the laws of the place of signing or of your domicile at the time, then it will be recognized as valid in California. If, however, the formalities were very different from those in California – for example, if the Will did not have any witnesses – then a new Will might be advisable in order to avoid having to prove at the time of death that the Will was properly executed.
In reviewing the content of a Will, the question is whether the Will covers all of the subjects that are usually covered in a California Will. For example: (1) Does the Will apply to all assets worldwide or only assets located in specific countries? (2) Does the Will appoint an executor to administer the estate? (3) Does the Will provide for the payment of estate and inheritance taxes?
Interpretation relates to the meaning of the words and phrases used in the Will. A word that has an understood meaning in one country may mean something different in another. While especially true for Wills written in languages other than English, it is also true of English-language documents.
Any review of a Will should also include consideration of US estate and gift taxes. A United States citizen, or a non-citizen domiciled in the US, is subject to estate tax on his or her worldwide assets. A non-citizen who is not domiciled in the US is subject to tax on real property located in the US, stock in US corporations, and certain other assets.
Finally, there are alternatives to Wills for transferring assets during life and at death. These include joint ownership, beneficiary designations, and revocable living trusts.
Any of these alternative forms of ownership may have tax consequences in the US and in your home country.