We all know we are supposed to do estate planning, but not all of us get around to it.
So what happens if you don’t have a will when you die?
Your estate will be distributed according to state laws, which may – but most assuredly may not – be the way you wanted.
Dying without a will is called dying “intestate.” Each state has laws that determine what will happen to your estate if you don’t have a will.
If you are married when you die, some states award one-third to one-half of your estate to your spouse, with the rest divided among your children or, if you don’t have children, to other living relatives such as your parents or siblings.
If you are single, most states provide that your estate will go to your children or to other living relatives if you don’t have children. If you have absolutely no living relatives, your estate may go to the state.
Note that any jointly held assets, such as bank accounts or houses, will go directly to the co-owner. In addition any life insurance policies or retirement accounts will go directly to the beneficiary, if any, designated on the account. And if you have a trust, remaining assets in the trust will likely go to the beneficiary designated in the trust.
One purpose of a will is to name a guardian for your young children; if you do not have a will, the court will determine who will act as guardian. The court will also appoint the person who will administer your estate.
In a nation where it is increasingly common for long term relationships, even those with children, are not formalized by marriage, your life partner – even when the parent of your child – will not inherit anything from your estate if you die without a will leaving property to the life partner.
To ensure your estate is distributed the way you want, you must coordinate leaving assets you own to persons you designate, and directing distribution of special assets (like insurance policies, tax deferred accounts, and multiple party bank and stock accounts) to persons you wish to have them. This is will require a will and often a trust and special power of attorney to fund the trust and help with changes that may be necessary to special assets. Contact a competent attorney to start planning.