Here’s a not-very-fun fact about dying without a will: in that situation, the government decides what happens to your assets. Many people believe that if they die without a will, their spouse or their children will decide how to handle their affairs and they will do so equitably. If you trust the government to protect your family, this is fine. But most people probably do not.
Dying without a will is known as dying “intestate.” The word intestate basically means passing away without having made a last will and testament.
When people allow themselves to think about their death, they often envision living for 79 years and predeceasing their beloved spouse, who immediately inherits the home and plenty of money. The person’s adult children take the rest of the estate in equal amounts and that’s all she wrote! Sounds good, right? Unfortunately, life doesn’t always go according to plan.
What Assets Are Distributed If You Pass Without a Will?
What does the government get to decide about your assets? Here are a few things subject to probate if you die without a will:
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Real estate
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Vehicles, including boats, recreational vehicles, and planes.
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Bank accounts
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Personal property, such as family heirlooms, furniture, and memorabilia.
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Pets
In the event that you pass away without a will, this property will be distributed according to the dictates of your jurisdiction’s probate laws. The probate process might take months or years, especially if the state needs to track down family members. It can be very costly, since the state will appoint a trustee and pay taxes. And speaking of taxes, in some states, your estate could be taxed at 16%!
Who Inherits When You Die Intestate?
When you die intestate, the state has to find some efficient way to deal with your assets. So, the law establishes a hierarchy of relations to decide who administers your estate and who inherits from it.
Married With Children
If you are married with children, generally, the surviving spouse is first in line to inherit the estate and serve as its representative. The next in line are your children, and then grandchildren. If you pass away without a spouse and children, or with complicated relationships with them, then your wishes, whatever they were, have no way of being honored.
Divorced With Children or Custody of Children
If you are divorced with children or have step-children, grandchildren you take care of, or foster children, the law does not treat them all equally. Adopted children are treated the same as biological children. However, if you have a step-child whom you raised but never adopted, most states don’t include them in the asset distribution. The same is true of foster children. When you are intestate, state laws favor biological over other types of relationships.
Here are a few cautionary tales to help you understand what is at stake. Our hero for these examples is Edgar Allan Moe.
Dying Intestate Horror Stories
The Widower: Edgar’s first wife Alice died ten years ago at age 57. The couple had three children who were all adults. When Edgar got remarried three years after his wife’s death, his three children were uneasy. Although they eventually learned to get along fine with Milly, the second wife, they don’t always approve of their father’s new lifestyle. When Edgar died suddenly at age 67, he didn’t leave a will. The children were shocked to find out that his entire estate would be inherited by Milly.
The Confirmed Bachelor: Now imagine Edgar was a confirmed bachelor for his entire life. He had seven siblings, all with families of their own. He did pretty well with his investments and never worried much about what happened when he died. He occasionally told friends he’d probably leave his money to charity but never got around to doing anything about that. When Edgard passed away at age 70, he left an estate of $3 million. He did not leave a will. Under the law, his estate had to be divided among his seven siblings. Since Edgar didn’t speak with his sister Jill, the other six siblings felt she should forgo her share of the inheritance. Jill said no way and the parties ended up in court. After an 18-month court battle, the estate was 50% smaller because of legal fees.
Life Partner: In this scenario, Edgar is the life partner of Maureen, who never wanted to get married. The two lived together for 25 years. Maureen worked a demanding job as a lawyer and was happy to see Edgar pursue his passion for painting and writing (which didn’t pay the bills). The couple lived in a large house that had been in Maureen’s family for decades. She always told her nieces that if anything happened to her, she wanted Edgar to have the house. But Maureen passed away intestate, and state law made her nieces her heirs since they were her closest living biological relatives. The house had quadrupled in value and the nieces decided to give Edgar the boot and cell it.
Life Insurance Mistake: Edgar was a young professor when he married Doris. The two had twin sons and Doris left the workforce to be a full-time parent. But after about five years of marriage, Edgar started drinking heavily. He became addicted to gambling. He had a life insurance policy that simply named “spouse” as his beneficiary. When the kids were 12 years old, the couple divorced. Edgar lost all of his money and his job and eventually drank himself to death. He had no will, but Doris was sure that the insurance policy would go to her. Unfortunately, the law dictated otherwise. The money went to his “next of kin” - his sons - but they were minors. The state didn’t allow Doris, as ex-wife, to be the trustee over the money. Instead, the state-appointed a money manager. Since the kids couldn’t access the funds until they turned 18, Doris had to return to work.
The Bottom Line: Get a Will
In all of these situations, Edgar Allen Moe and his family and friends had pretty solid ideas about what should be done in the event of an untimely death. But since neither Edgar nor his paramours ever wrote anything down, the decisions were out of their hands. Don’t let this happen to you - making a will is simple and is the best way to make sure that you, not the government, has the final say over your story.
