But what if there is no will? According to LexisNexis, 55 percent of people die without either a will or a trust. Sometimes they assume everything will somehow magically work out the way they expect. Most people, I think, have in the back of their minds that they should have a will or some other kind of estate plan, but never get around to doing it. They may expect that probate will be involved and that there is nothing they need to do to expedite things. Isn’t it really a problem for the heirs?
If you don’t decide on an estate plan for yourself, your state laws have already made one for you. Not having an estate plan is somewhat like not voting. The law assumes that you must not care what happens and are willing to accept whatever everyone else decides; otherwise you would have done something about it.
The laws determining who gets what when a person dies without a will are called the laws of descent and distribution (or, the laws of intestacy). These state laws lay out the respective shares of the heirs of the deceased and depend upon whether the person was married or had children, or both. They vary from state to state, but the laws are similar. The text of the law in Appendix A is a typical example from Michigan, but a simple internet search for “descent and distribution” with the addition of your state’s name will give you specifics for your state.
Making your own plan to leave your assets at your death, by will or otherwise, can also avoid unintended inheritances. Suppose you have no children and your spouse dies, leaving business assets or accounts that were in her name alone. According to the rules in Michigan you would get “The first $150,000.00, plus 3/4 of any balance of the intestate estate, if no descendant of the decedent survives the decedent, but a parent of the decedent survives the decedent.” Do you really want to share your spouse’s separate estate with your mother-in-law? Most of us assume our spouse would be entitled to our assets if we die without a will, but that is just not always true.
Another typical situation: Your spouse has children, but none of them are your children, and then your spouse dies. In this case you would get the first $100,000 of his assets and one-half of the rest. This can create severe hardship on a surviving spouse who had been counting on all the assets for his or her support and maintenance for life.
Now, if you and your spouse jointly own everything and are each other’s beneficiaries, it is true there would be no probate at the death of one of you because there are no separately owned assets remaining at the death of the first spouse. But what if you each have separate assets, like business or partnership interests or private bank or investment accounts? In that case the intestacy laws apply. And at the death of the survivor, probate would likely be inevitable, and your heirs will not only get just a partial share but will be shouldering the costs of probate as well.
Try not to die intestate unless you agree with the state intestacy rules. Making sure your intentions are followed as to the distribution of your estate at death is important, but not forcing your spouse or children to go through the expensive and time-consuming probate process is equally important.
Unmarried couples in particular must have a will or a probate-avoiding estate plan. Without a recognized legal marriage, the couple does not have spousal rights as set out in the statutes. This can lead to disinheriting your companion. A will, trust, or other plan can avoid this unfortunate situation. I have seen a surviving unmarried partner be forced out of a house he had lived in for thirty years by the children of the first partner to die, since the house had been owned only in the deceased partner’s name. He died and the house now belongs to the deceased partner’s children. Planning is everything.
An important point is that in nearly all states it is impossible to totally disinherit a spouse by use of a will. The surviving spouse typically has a right to either take what was left to him or her in the will or take what the state statutes would allow instead: a “forced share” of the total probate estate. There are also rules permitting a spousal allowance to be paid prior to the closing of probate. Interestingly, in many states the deceased can disinherit a spouse through a living trust, but not through a will. So, there’s another reason to avoid probate if you are not inclined to take care of your spouse. This is also important for separated or estranged couples with separate assets.
Can’t the state make a regular will for you so you don’t have to deal with intestacy laws? In fact, some states have a state-promulgated “statutory will.” This is a fill-in-the-blank will form available from the state, so that those without wills can get one without having to pay a lawyer. But it is still a will, and while in some cases it is better than no will at all, it still has to be probated if assets are to pass through it to your heirs.
There are other areas of your life where probate court can make things difficult if you let them. You might not want the court involved in managing your money and medical care decisions should you become incompetent because of Alzheimer’s or dementia. You might also prefer someone other than a court-appointed conservator to manage the inheritance going to your minor children until their adulthood. We can avoid the courts in those situations just as we can avoid the court supervision of estates.
Typically, in the civil areas, the probate court handles the estates of deceased persons as well as adult and children guardianships and conservatorships, adoptions, and foster care. They might also handle juvenile criminal cases and termination of parental rights. This can vary from state to state, but for purposes of this book we will be concerned only with probated estates, guardianships, and conservatorships.
(To be continued...)
This excerpt is taken from “How to Avoid Probate for Everyone: Protecting Your Estate for Your Loved Ones” by Ronald Farrington Sharp. To read other articles of this book, click here. To buy this book, click here.
The Epoch Times copyright © 2023. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.
