Nearly two-thirds of Americans pass without a will, a situation known as passing intestate.
While the reasons for not having a will vary, the outcome is the same: you lose the ability to decide who will inherit your property. Assets are instead distributed according to state intestacy law, a legal process called intestate succession.
This isn’t always a bad outcome. In most states, priority is given to the decedent’s spouse, children, parents, and siblings. But even if someone is comfortable with their next of kin inheriting their estate, the lack of a will can still lead to a lengthy and expensive court process.
State laws assume how the average person would want their estate distributed, but these laws may not reflect the decedent’s actual wishes. When this happens, it can create complications and unintended consequences.
The Consequences of Passing Intestate
The following are a few complications that arise as a result of passing intestate.
Non-blood Beneficiaries
Intestacy laws often exclude stepchildren, foster children, children placed for adoption, and non-relatives like close family friends or charities.
Distribution of Assets
Intestate laws rigidly dictate who gets how much, without accounting for special circumstances. For example, a beneficiary receiving income-based assistance could lose their benefits due to an inheritance that might have been better managed through a trust. Intestacy laws don’t allow for unequal distributions or intentional disinheritance of a child, even when a parent has valid reasons for doing so.
Additional Challenges
Without an estate plan, other challenges can arise:
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Loved ones may not be able to carry out specific funeral wishes.
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The probate court will appoint a personal representative to manage the estate, who may not be the decedent’s preferred choice.
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The court will decide who will raise any minor children.
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Small business owners could lose control over the fate of their business.
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Property intended to stay in the family could be sold.
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Probate can delay the distribution of assets and drain resources from the estate.
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Disputes among heirs could occur over the decedent’s intentions.
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Digital assets, like social media or fintech accounts, could be left unmanaged.
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There may be no instructions for end-of-life care or incapacitation.
While not all accounts and property go through probate when someone passes intestate, anything owned solely by the decedent and lacking a beneficiary designation will be subject to intestacy laws.
Don’t Let the State Decide Your Legacy
Passing is unpredictable in terms of timing, location, and manner, but you can control your legacy by making your wishes clear through an estate plan.
Some people avoid estate planning because they think they are too young, lack sufficient assets, or can’t afford it. However, the better question is: Can you afford not to have a plan? A basic estate plan can be affordable and offers peace of mind, knowing your assets will go where you want them.
Don’t let the state dictate your legacy. Create an estate plan and make your wishes known.
