What Happens if You Die Without a Will
So, you've decided to pass without a will. Yep, chosen, because anyone can make one, and if you haven't, it's a choice. It's like saying, "Surprise me with chaos!" Life's full of surprises, so why not add a twist after you're gone? While you've picked the unpredictability of not having a will, let's peek into the world of what happens next. Get ready for a wild ride of legal puzzles, family dramas, and 'who gets what' uncertainties!
I'm afraid to tell you... you're intestate.
When someone dies intestate, state laws, known as intestacy laws, come into play to determine how their estate will be distributed. These laws vary from state to state and typically follow a predefined hierarchy of inheritance. Usually, assets will be passed on to the surviving spouse and children first, followed by other relatives like parents, siblings, or more distant relatives, depending on the specific state laws.
If you have decided to die without a will, it is important to know how your assets will be distributed as some states might surprise you.
For a list of various intestate rules, check out this article: Intestate Succession | Nolo
But the good news... intestacy only applies to certain assets!
It’s crucial to note that only specific assets are subject to intestacy. These typically include assets solely in the deceased’s name, such as real estate, personal property, and bank accounts. However, assets like life insurance proceeds, retirement accounts, and properties held in joint tenancy or with designated beneficiaries pass outside of intestacy and are directly transferred to the named beneficiaries.
For more on this, see my article: 5 Methods of Estate Transfer – Gilbert Wealth
Don't have a Will and have children? Read this...
One of the most important aspects of a will is naming a guardian for minor children. Without a will specifying your wishes, the court steps in to appoint a guardian. This process can be lengthy, emotionally taxing, and may result in a guardian choice that doesn’t align with what you would have wanted. The court’s don’t know your child and don’t know which family member or close friend might be best to raise your child.
A will offers peace of mind, ensuring your children are cared for according to your wishes.
A Will can Speed and Costs
A Will can speed up your estate settlement by providing clear instructions for how the deceased assets will be transferred and by naming an executor. It also avoids the intestacy process which can become complex and costly.
How taxes are impacted
While a will doesn’t inherently reduce estate taxes, it allows for strategic planning to minimize the tax burden. Without a will, your estate is distributed according to intestacy laws, which might not be the most tax-efficient way. For instance, bequeathing assets to a spouse can defer estate taxes until the surviving spouse’s death. In contrast, intestate succession may distribute assets in a way that triggers immediate and higher taxes.
How to get a Will
A Will is a fairly simple document to put into place. Here are the most common ways:
- See an attorney
- Create one online through the many places that offer this service.
- Buy a Last Will and Testament packet and complete it