So, what happens if someone dies without a will?
Dying without a will is called dying intestate. It means dying without testament, specifically one’s legal testament regarding the management and distribution of one’s belongings and possessions after death.
Dying without a will means having everything you own automatically distributed among your next of kin as per state law. The way your belongings will be distributed depends on who you’ve left behind, and where you lived.
If you owned property across state lines, the intestate law of where you resided and died would still take precedence, but the person in charge of arbitrating the whole process would have to file for individual instances of probate in each state and consolidate them.
This, along with a number of other hiccups and legal complications, highlights the weaknesses and downsides of leaving behind an estate while intestate – the larger and more complex the estate, the more time-consuming the probate process associated with it.
An estate plan can not only allow you to decide who gets what through a last will and testament but provides a large array of contingencies to further simplify the distribution of assets before and after death, minimize taxes, and cut down on some administrative costs.
What It Means to Die Intestate
Dying intestate can be reduced to the loss of choice. All it really means is that there is a set plan for how your belongings and assets will be distributed among your next of kin. This set plan, called intestate succession, differs from state to state.
A common thread is that a large proportion will pass to your surviving spouse, and the rest goes to your kids. Childless couples might see everything inherited by the spouse. Unmarried or widowed individuals will distribute their belongings between their offspring. When there are neither partners nor children involved, parents become next in line.
The state-to-state differences lie in matters such as whether property is counted as community property, how separate property is split, whether adopted children are heirs, rules of inheritance for unmarried life partners, how an estate is split between multiple children, and so on.
The larger the estate, and the more blended the family, the more complicated the situation.
None of this is bad, per se. There are many who don’t feel particularly troubled by the idea that their estate might be split randomly and distributed among their loved ones. But that doesn’t mean dying intestate is without its drawbacks, even for those who aren’t interested in how their financial legacy is divided.
Planning ahead for your estate before death allows you to minimize both the costs and paperwork associated with distributing what you owned among the living. It also allows you to make important final arrangements for your own death and funeral, as well as appoint trusted individuals to act in your name should you be incapacitated, yet still living.
If you’re chronically ill, or at risk of requiring life support someday, you can use estate planning documents to express your interest in terminating extraordinary lifesaving measures, or vetoing certain medical procedures.
To die intestate means to die without a will, not without an estate plan. But most people who do not have a will tend not to have any other kind of estate planning document. And even if you don’t have a grand plan for your estate, a simple will can make not only your life easier but will most importantly have an impact on the lives of those you leave behind.
The Importance of a Will
A will’s key feature is the ability to describe how you would like your belongings to be distributed during the probate process. But there are other key features to a will.
Chief among them is the ability to assign a guardian to your minor dependents, for example. If you are leaving young children behind, a will is one of the only ways to officially name someone as the ideal candidate for guardianship.
Assets That Are Transferred Without a Will
Even without a will or estate planning documents of any other kind, it helps to know that there are some things that are transferred automatically upon death.
The concept of the probate process and wills, in general, exist to provide a legal framework for the transfer of ownership after death, so a person can wholesale decide how their belongings will be distributed when they die (or have a trusted administrator do so for them in intestacy).
But if you take certain steps to assign ownership to others before you die, you can bypass probate – in at least a few instances. Life insurance policies, for example, only turn to real cash upon your death. As such, they will always have a designated beneficiary or multiple different beneficiaries. This means that the payout for a life insurance policy doesn’t need to be addressed in a will. It belongs to the beneficiary upon death.
Other examples of assets that can be assigned to beneficiaries include:
- Trusts and trust funds.
- Retirement accounts and their remainders (401(k)s, IRAs, etc.)
- Certain bank accounts.
- Real property and vehicles, via transfer-upon-death clauses.
- Life insurance policies.
- Co-owned real estate.
- Real estate held in joint tenancy, or with right of survivorship.
- Stocks and other financial instruments held in a transfer-on-death account.
Assigning beneficiaries to large properties, or assets that might be complicated to evaluate and distribute upon death, such as out-of-state assets, can help you save yourself a lot of trouble, and save your family a lot of headaches. But it’s still just one step of what a comprehensive estate plan might look like.
Avoiding Probate Through Trusts
You can carefully coordinate with estate planning professionals to set up the kind of estate plan you might need to cover all of your individual requirements. Trusts are often a big part of that process, especially for larger or more complicated estates.
Trusts can be used to trim your probatable estate, and greatly simplify the process for your loved ones. Utilizing trusts and other methods also allows you to strip your estate down to the point where your administrator might file for a small estate affidavit to expedite the process.
But with estate planning in general, and with trusts especially, it’s always best to work with professionals.