What happens to the property of a deceased person without a will?

Drafting and finalizing a will is a crucial step in any Estate Planning venture. Why? Lets imagine a scenario to help clarify:Molly is in an unmarried relationship with her partner

What happens to the property of a deceased person without a will?

Drafting and finalizing a will is a crucial step in any Estate Planning venture. Why? Lets imagine a scenario to help clarify:

Molly is in an unmarried relationship with her partner. Her parents are both deceased and she has one estranged sibling. That sibling, however, has a son whom Molly adores. Molly has vowed to pay for her nephews college tuition  shes even told multiple friends and family members about this plan  but she unexpectedly passes before creating an official will. Depending on the state in which Molly resides, her entire estate would likely be inherited by the alienated sibling with whom she hasnt spoken to in years.

The only way Molly could have prevented this unfortunate result is if she had clarified in her will that she wanted her assets gifted to her nephew.

Keep in mind, what happens if you die without a will is different in every state; but well do our best to answer that question by:

Dying Without A Will - What Is Intestate?

Intestate, or Intestacy, is what happens to an estate in the case an individual dies before creating a will. As well discuss below, the intestacy varies from state to state, which underscores the importance of having a proper Estate Plan in place.

Every state has their own established intestate process that determines whether a persons assets will be given to their spouse, children, parents or siblings. When someone dies without a will, their assets are frozen until the court system combs through every detail of their estate. The court then applies its state intestacy laws to make a decision regarding where a persons possessions will be allocated This process can be time-consuming and exhausting for the surviving family members  but is easily avoidable.

Continue reading to learn about what will happen to your children, money and other assets in the unfortunate case you pass away before finalizing a will.

undefined

Dying Without a Will: Your Money

Your states intestate succession laws will determine where your money goes if you pass away before creating a will. This requires going into probate court where the court will appoint someone as a personal representative to oversee distribution of your belongings. One benefit of going through probate is that the process starts by cutting off all creditor claims. This can reduce the time creditors can file claims to as few as three months. Once the court pays off your debts, your remaining assets will be allocated to your heirs (and this varies by state).

Every state follows a different set of rules, so where you live will determine exactly how the state will distribute your estate. There are different rules of priority for this. Most often, the spouse has first priority; then children, grandchildren, parents, and siblings. In the case there is no spouse and two kids, both children might be appointed as co-heirs (or perhaps the court will appoint just one.) And keep in mind, there is some discretion in how the rules are applied.

For example, the State has full say over who gets to be a persons executor of estate (sometimes referred to as administrator or personal representative) if said person dies in California. In Texas, on the other hand, residents who die without a will are automatically entered into the state's intestacy probate process. In most states however, spouses, domestic partners and blood relatives are first in line when it comes to receiving inheritance.

Certain assets,  like retirement accounts and life insurance policies  will go to the pre-designated beneficiary even if those line items arent explicitly listed in the will.

Dying Without a Will: Your Children

Childrens rights are put into the hands of the court if you pass away before creating a will or naming your offspring as beneficiaries. This is why it is especially important for parents to prioritize their Estate Planning.

State judges will do their best to ensure a childs guardianship is in his or her best interest, but the fact remains: courts dont know the child or the family dynamics, which makes it incredibly difficult for them to determine what is best. In most cases, a family member will volunteer to raise the children of their deceased relative. However, its impossible to guarantee that the child (or children) will end up in the household of their parents choosing without a proper will.

Dying Without a Will: Your Property & Taxes

How is your estate taxed after you die? The answer varies state to state, but well break down some basics.

Under Federal law, your estate is taxed by 40 percent if its worth over $11.58 million. Anything under that amount is generally exempt from federal taxes. State taxes are an entirely different story, especially if you pass away before writing a will.

In some states, your estate is taxed at up to 16 percent if its worth over $1.6 million. Other states use their exclusively designed formula to divide your estate taxes among your spouse and children.

Delaying the necessary steps to write your last will and testament could also mean forfeiting your spouses marital deduction (which, when documented in your will, allows them to inherit your entire estate, tax free.)

What Happens if You Die without a Will? Single vs Married vs Domestic Partnership

The above scenarios describe what could happen in cases where a person dies before preparing their will, but now well break down the details even further and based on a persons relationship status at their time of death.

  • Single: There are several scenarios that can occur if youre single and die without a will. In the first, your children would inherit your entire estate if not otherwise specified in your will. In the case you have no children, your parents (if still alive) would be in charge of your estate. Finally, your estate would be given to your siblings (in equal shares) if you have no children and your parents are deceased. In the rare instance you have no spouse, children, siblings, or descendants of siblings (nieces and nephews), the family on your mothers and fathers side would split your assets equally.
  • Married: In almost every state, your surviving spouse will get a portion of your assets if you pass away without a will. Keep in mind that rules and regulations vary somewhat significantly state to state, so your personal Estate Planner will have to hash out the details. When youre married in California and have children with only your surviving spouse, the spouse receives 100 percent of your community property; the remaining assets are divided per intestate succession law. In instances where people have children with previous partners, one half of their estate would be equally distributed among those children while the other half would be given to their surviving current partner. Again, exact numbers differ in every state. In Tennessee, for example, the surviving spouse is given only a third of the estate and the children get the rest.
  • Domestic Partnership: Unfortunately, not every state legally recognizes domestic partnerships, which is why its important to check your particular states regulations when it comes to dividing a persons assets after their passing. In most states however, a domestic partner is given the same rights as a spouse (depending on how the property is owned).

Dying without a will can precipitate a myriad of burdens for the deceaseds family members.

Think of a will as your voice after youve passed. You have the ability to dictate the future of your assets if you plan in advance; and its not that hard to get started! While every states law is designed to do whats in the best interest of a descendent, the only way to avoid your assets falling into the wrong persons hands is by prioritizing your Estate Planning today.

Video liên quan