Why it’s never too early to begin end-of-life planning
There’s one part of each of our lives that creates a tremendous impact on our loved ones, our legacy and the future of our assets, but it’s one we don’t like to talk about, much less plan for. That portion is the end, the moment we pass away.
So what happens if you die without a will? When that time comes, you don’t want to be unprepared or leave anything unfinished for your beneficiaries. At the time of your death, you should have legal documents in place to distribute your assets the way you see fit, rather than leaving those important decisions for others. The best way to manage your assets in advance is to set up an estate plan that includes a will.
If you choose to forego estate planning and creating a will, there are some important things to consider. Dying without a will means that you have died “intestate.” Your assets would be frozen until the court system decides how to distribute your estate. Intestate means that the intestacy laws of whatever state you live in will ultimately make that decision.
Whether you die intestate single, married or with children, the laws can vary state to state, making it even more important to keep an estate plan top of mind. Leaving intestacy laws to determine the distribution of your assets can be a messy and time-consuming process for your surviving family members and relatives.
We’ll take you through several scenarios and show you what would happen if you didn’t have a will in place at your time of death.
What Happens If You Die Without A Will?
Dying single without a will
This is one of the more simple outcomes when dying without a will because it directly involves your family members and relatives. However, there are a few possible scenarios in this case.
If you’re single and childless, your parents will receive your estate if they are both living. If only one of your parents are still alive, your estate may be divided between your siblings, half-siblings and your living parent. If neither of your parents are alive, and you have no siblings or children of your siblings that are alive, your estate would be equally divided up between the relatives on your parents’ side of the family.
If you have any remaining debt at the time of your death, your assets will be used to pay off that before your assets are distributed to any of your family members.
Dying single, with children and without a will
In this case, your estate will most likely go to your child. If you have multiple children, your estate will be divided equally among them.
It’s important to note that if any of your children have died before you, that child’s share of your estate will go to your grandchildren, if there are any.
Dying married without a will
This potential outcome can be more challenging, depending on how your assets are owned between you and your spouse. Exact numbers for estate division when it comes to spouses can differ in every state. In this instance, your estate can either go fully to your spouse if it’s considered community or marital property, or be split between your spouse, siblings and parents if it’s considered separate property.
If you are married and have children with your current spouse, your estate will pass to your surviving spouse. In the case that you have children from another spouse or partner, your current spouse will receive up to 50 percent of your estate, with the other 50 percent going to your surviving children from that other spouse or partner.
Dying in a domestic partnership without a will
In this situation, it’s important to know whether your state recognizes civil unions or domestic partnerships in its laws. Those laws will directly affect how your assets and property will be distributed when you die.
In the instance your state recognizes civil unions and domestic partnership, your domestic partner would inherit your estate in the same way that a surviving spouse would. However, this does depend on how your property is owned.
Dying in an unmarried relationship without a will
When you don’t have a will in this situation, this can be the most difficult scenario for your surviving relationship partner. Intestacy laws don’t often recognize anyone who isn’t your direct relative. This means that unmarried couples cannot inherit the property of the other partner when they die.
For this reason, a will that clearly states your intentions in leaving some of your estate to your relationship partner is one of the only ways to ensure they will receive any of your property or assets when you die. Without a will, your property will be divided exclusively among your relatives.
How To Approach Your Estate Plan
Taking a look at what can happen when you die without a will may be overwhelming for you and you may not know where to start. However, it’s important to begin taking steps toward creating an estate plan and making decisions now so that your future is secured for both your own peace of mind and the comfort of your beneficiaries. Trust Point regularly receives questions from clients about estate planning so we can make this process easier for you.
Starting off, regardless of how you choose to plan your estate—will, trust, or anything else—it’s important to hire a licensed and reputable attorney to help you plan and draft each document. An attorney will ensure that your decisions are both valid under state law and effective in distributing property in the event of your death.
When you first sit down to begin estate planning, you may be familiar with the idea of setting up either a will or a trust. A will is a legal document that directs how all of your assets should be distributed to your beneficiaries upon your death. A trust is a common alternative or companion to a will, and involves giving another party authority to handle your assets for your beneficiaries. There are many different types of trusts out there that vary situation to situation.
On the surface, a will and a trust may sound very similar, but what they can do for you can be very different in the long run.
Should you set up a will or a trust?
When setting up either a will or trust, there are many factors to consider.
If you choose to write a will, your assets will most likely go into probate after your death. Probate is a process where a will is reviewed by the court to determine whether it is valid and authentic. If found valid, the court will name a personal representative responsible for carrying out the will’s terms. The personal representative, also referred to as the executor, must receive ongoing supervision by the court throughout the process and may require the assistance of an attorney.
This lengthy and expensive process, not to mention, stressful, can be avoided by instead creating a revocable living trust. This is a legal entity that a person creates and funds during their lifetime, entirely separate and distinct from that person. Similar to a will, the document outlines how their property should be managed after their death and may later be amended or revoked. In the event that you become ill or experience health concerns, you can prepare your estate by electing a successor trustee to take over the role of handling your affairs.
While a trust can eliminate probate, it generally requires more work, planning and legal expenses for the trust creator, also known as the grantor. In addition to a revocable trust, many grantors sometimes choose to create a pour-over will, which is an additional step taken to ensure any assets that were not retitled into the revocable trust and would be subject to probate are transferred to the trust. This gives you an additional safety net if you decide to go with a revocable trust.
The time and expense of the trust process should be weighed against the time and expense associated with a will and the probate process. While a trust can be typically less burdensome, the choice is ultimately up to you.
Speak With A Trusted Professional From Our Team!
Whether you’re creating a will or a living trust, we’re ready to work with you and your attorney. Contact us to schedule a conversation with one of our professionals. We’re committed to making things simple and stress-free for you, so you can be confident in making these important decisions.