One hundred percent of all people die.
And yet only four in ten adults in the United States have made preparations and provision for their families when they die. Approximately sixty percent of Americans do not have a will or estate plan.
Not understanding the need for a will stems from not understanding what happens to your estate if you die without a valid will.
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With or Without a Will
Regardless of if you have a will written or not, the same things happen to your estate when you die.
If you have a will, you will have already appointed a person to administer the estate. This person is called the executor of the estate. Your will will dictate this role.
If you do not have a will, then the probate court will appoint someone to be the executor.
Your will dictates what will happen to your estate. You need to understand early on that you have things your will cannot pass on to your heirs.
Documented Beneficiaries
For example, if you own anything in joint tenancy or community property with the right of survivorship, your will does not pass this property on. So if you own real estate, a bank account, or any other asset in cooperation with someone else, you will have documentation attached to that ownership that dictates what happens to it when you die.
If you hold property in a living trust or funds in a retirement plan where the beneficiary is named, a will does not change your beneficiary.
If you have a POD or payable-on-death bank account, you will have already allocated the funds in the paperwork for the account.
If you have any TOD accounts or transfer-on-death accounts, then the documentation on those accounts will dictate a beneficiary. This would include stocks, securities, real estate, or vehicles with a TOD deed or title document.
So from the beneficiary's perspective, if your benefactor dies, you do not automatically receive everything. Documentation attached to these assets will determine who receives them.
What Happens if You Die Without a Valid Will
If you do not have a will, the probate court will appoint an executor to your estate. This individual will determine who receives what within the boundaries of your particular state's probate laws.
The probate or inheritance laws vary from state to state. Most states adhere to a form of the 1990 Uniform Probate Code. So when looking for general guidelines as to what will happen if you die without a valid will, this code works well as a starting point.
Those who inherit property from an individual without a will fall under intestate succession laws.
What is Intestate Succession?
The term "intestate" refers to an individual who dies without having made a will. So intestate succession means the order in which individuals inherit from an individual's estate when there is no estate plan. These laws, in short, determine who receives what and in what order.
Intestate succession has a purpose. The law attempts to predict what the decedent would want if he or she had a will in place. The laws are standard and do not change from person to person, but they do vary from state to state.
The 1990 probate code provides the succession that makes the most sense for most, functional families.
Surviving Spouse
A surviving spouse usually receives half of the estate under the 1990 code. If the decedent has no other living close relatives, meaning children or grandchildren, then the surviving spouse will receive the entire estate. If all of the decedent's children are also the surviving spouse's children then the surviving spouse may receive the entire estate.
Children and Grandchildren
If the decedent had children, then the surviving spouse and children share the entire estate in most cases.
However, if there are children of the decedent have all died before the decedent, then grandchildren share the estate.
If the decedent has children that are not children of the surviving spouse, then the surviving spouse receives the first $150,000 of the net estate plus one-half of anything that exceeds $150,000. The surviving children of the decedent share the rest.
The law treats adopted children just like biological children, so they will receive whatever a biological child would receive.
Parents and Other Relatives
If the decedent has no children or grandchildren but his or her parents are still alive, then the surviving spouse typically takes the first $200,000 of the net estate plus three-quarters of anything exceeding that amount.
If the decedent has no children, grandchildren, or surviving spouse, then his parents will typically receive the entire estate.
If the decedent has no surviving parent, spouse, children, or grandchildren, then the estate passes to siblings and then aunts, uncles, nieces, nephews, and cousins.
Domestic Partner
If you're the significant other of a decedent, you need to be aware of your state's probate laws.
The probate laws for domestic partners vary significantly from state to state. Some states recognize the domestic partner as a spouse, and others do not recognize the domestic partner as any sort of relative.
Who Does Not Qualify?
Typical probate laws recognize blood relatives only. So step children, close friends, and charities do not qualify. If you die without a valid will, even if you want your estate to go to a worthy charity, it won't.
Laws Don't Read Minds
Typical probate laws predict what the decedent would want if he or she had a functional family. If you do not want your estate to be subject to probate law, find an estate attorney that will ensure an executor follows your desires after you can no longer state them yourself.
Your will acts as your voice from beyond the grave. It matters.
To Will or Not to Will: You Decide
If you die without a valid will, your descendants will receive your estate. If you're in good standing with those relatives, then you may have no problem with how probate laws distribute your estate.
However, you cannot predict what will happen when you die. The lack of a will has the potential to cause more problems than it solves.
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Posted by PreReal™ Prendamano Real Estate on
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