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Intestacy 101: Intestate Succession Essentials

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Intestacy 101: Intestate Succession EssentialsPeople who die without a legally valid will are said to have died intestate.  Such persons have no control over who receives their probate assets when they pass away.  Instead, intestate succession laws, also known as state intestacy laws, determine who will inherit their assets.

Probate vs Non-probate Assets

When you die, your non-probate assets will pass to their new owners by trust, beneficiary designation, or operation of law regardless of whether you have a will or not.

For example, if you were to title all of your savings accounts, checking accounts, money market accounts and brokerage accounts to a living trust or own them as a joint tenant with right of survivorship, these assets would likely pass automatically to the appropriate beneficiary outside of probate.  Life insurance and an IRA may also pass outside of probate to the designated beneficiary.

Probate assets, however, will generally pass to the beneficiaries listed in a will if there is one.  If there is no legally valid will, probate assets will pass by intestacy.

Since the decedent is no longer alive to make his or her wishes known and created no legally valid record of such wishes while still alive (i.e. a will), the state intestate succession laws will determine who is entitled to the deceased person’s property and how much each heir will receive.  Intestacy may lead to different results than what the deceased person would have actually wanted.

State Intestate Succession Laws

Intestate succession laws, which vary from state to state, provide the basis for the disposition of a deceased person’s assets amongst relatives where the decedent has failed to prepare a will.  Intestacy takes multiple factors into account when deciding to whom your assets will be distributed, including the following:

  • State of residency
  • Marital or domestic partner status
  • The existence of children
  • Other relatives

States generally rank heirs by relationship and intestate succession requires that assets be distributed in that order.  Relatives appearing lower on the intestacy hierarchy oftentimes won’t receive anything unless there is no surviving spouse, children, etc.  Intestate succession generally calls for equal division of assets among heirs of the same rank in most states.

For example, in some states, intestate succession may require that assets pass to relatives in the following order:

  • Surviving spouse
  • Children
  • Parents
  • Siblings
  • Grandparents
  • More distant relatives

Intestacy laws in other states may have different rules, such as having assets split 50/50 between a surviving spouse and children rather than having all assets pass a surviving spouse.

In general, only blood relatives, spouses, and domestic partners (in certain states) may inherit property under intestate succession laws.  Charities, friends, and unmarried partners may be out of luck, even if the decedent would have wanted part or all of their property to pass to them.

In rare cases when there are no living relatives, intestate succession generally calls for the state to take ownership of the property.

Avoiding Intestacy

Few people plan to die intestate as part of their estate plan.  Most people would rather set up legally valid arrangements to avoid intestacy and ensure their wishes are met no matter what the future holds.

Besides just giving you a say in who receives your property at death, a will also allows you to appoint a guardian for minor children, appoint an executor for your estate, and achieve other important objectives.

Creating a will is generally pretty simple.  Here are a few of the most common ways to create a will:

1.  Online Providers

For a small fee, an online legal document provider will ask you various questions and then create a will and other important estate planning documents based on your responses.

Creating a will using one of these services generally takes only 15 – 30 minutes and costs a small fraction of what an attorney would charge.

One of my favourite online providers is Rocket Lawyer, since it provides you with the option of having an attorney review your documents, which I think is very important.

Other online providers include Find Legal Formsand Socrates Media.

2.  Estate Planning Software

Another inexpensive option is to use software, such as Quicken WillMaker Plus  or Will Writer to create a will and other estate planning documents. 

Similar to an online provider, software is likely to be much less expensive than using an attorney but is probably only appropriate for people with relatively straight forward financial affairs.

3.  Estate Planning Attorney

An attorney can also prepare a will and other appropriate estate planning documents for you.

Hiring an attorney will likely cost much more than using an online provider or software.  However, using an attorney is highly recommended if your estate is large or complex.

If you decide to use an attorney, make sure you use an estate planning attorney.

Additional Intestacy Information

For additional information about intestate succession and estate planning, check out the below books:

What are your thoughts about intestate succession?  Have you taken steps to avoid intestacy and accomplish other important estate planning objectives?  Leave a comment below!

Image: zimmytws/bigstock

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