What Happens If You Die Without a Will?
This article was originally featured on OvidLife.com.
Believe it or not, every state has rules for the distribution of a person’s assets/ property if they die without a Will. There are many differences in how states determine how to pass assets, so it pays to develop and put an Estate (assets/property) strategy in place. This starts with a Will. This is particularly true if you wish to have your stuff (assets, property) go to someone of your choosing. So I always encourage everyone that is in a serious relationship, married, domestic partner, has a second family, with or without children, is charitably inclined to seek professional review of all their assets and have a current Will. Life changes occur and you can always change your Will while you’re alive, (consult with your Certified Financial Planner (CFP) and Attorney).
When a person passes away without a Will, it is said they die Intestate. This is also true for people that have had a Will revoked, annulled or declared invalid. Normally the state where you are domiciled (resident) controls the disposition of all the person’s property within the state. It gets more complicated when out-of-state domicile property, which is then controlled by that states Intestate distribution laws. If you die without a Will and don’t have family, even a distant relative, your asset/property will escheat, go back to the state. Your asset/property will not go to the state if you have a spouse, children, grandchildren, parents, grandparents, siblings, nieces, nephews or cousins, however, it will only go to the state if they cannot be found or located. So written instructions are very important.
What happens to my estate if I die without a Will? Property or assets with named beneficiaries, passes by contract and operation of law supersede a named beneficiary listed in a Will. What does this mean? If you have a named beneficiary on a life insurance policy, IRA, retirement plan, contract, or account with rights of survivorship designations or Transfer On Death (TOD), (investments, savings), it will pass to the indicated beneficiary despite what you write in your Will or currently want while you’re living. Be careful and make sure you plan out your entire Estate with your trusted (CFP) or Attorney. You should review the designations on all your assets/property, pretty much at any age. I have seen many strange situations occur like a home that was bought by a person before marriage with a relative. When I started working with a married couple of 15 years and reviewed their possessions (assets/property), it was discovered the brother of the wife was on the deed of the house. I have also seen ex-spouses on insurance policies which really pleases the current spouse. Needless to say interesting discussion was had in various tones.
I live in New York and NY Intestate laws are pretty well defined. The rules of who gets what depends if you have a spouse, children, descendants, parents or siblings. If you are married and you die without a Will what your spouse gets depends if you have living descendants (children, grandchildren or great grandchildren, parents, siblings etc.). Your spouse gets the assets if she/ he is named the beneficiary, the first $50,000 of your Intestate property plus half (1/2) the balance. Other noteworthy items are legal, emphasis on legally adopted children or step children are considered for a full share as is your biological children conceived but not yet born. In last summer’s Supreme Court ruling, legally married same sex partners have the same rights as any married spouse. A domestic partner not legally married may have to fight for their fair share.
The bottom line, if you wish to ensure the person or organizations including charities of your choice receives what you intend, put it in writing with a Will (a legal document). As you get more stuff (assets, property) and we all collect more stuff over time, consult with your Certified Financial Planner (CFP) and have your Attorney draft the Will while you are healthy and have all your decision making faculties. If you have any questions or I may be of help contact: email@example.com.
Disclosure: The content in this article will vary from state to state for each individual, family, organization. Consult with your Attorney for additional information.
Peter J. Creedon CFP®, ChFC, CLU is the Founder and CEO of Crystal Brook Advisors, a NY Registered Investment Advisory firm. For over 15 years, Peter has successfully advised, guided and educated young professionals, families, private wealth investor, small businesses and large corporations in comprehensive financial planning and investment management solutions. Peter’s counseling assists investors, businesses and corporations through their financial challenges and triumphs of life. For inquiries or questions, contact: firstname.lastname@example.org.