Estate planning and the idea of an intestate estate are so closely related that understanding one concept (intestate estate) typically increases your knowledge of the other. If you know what an intestate estate is, you will understand why having an estate plan is so important. Today we are going to take a closer look at intestate estates, what they are, why they matter, and what you can do about them.
Who inherits your property after you die? Will it be your spouse, your children or grandchildren, your parents or more distant families, or the state?
When most people die, the answers come not from their estate plans, but from the laws of intestate succession. This is because most people never create a will or other inheritance planning device. Estates (property) left behind by those who die without a plan are known as intestate estates. An intestate estate is one that is not governed by the terms of a decedent’s last will and testament.
If this happens, state laws known as laws of intestate succession determine who inherits this property. Because most people die without a plan or will, most estates are distributed in accordance with intestate succession laws.
Intestate succession laws serve as default inheritance laws. They identify who inherits the property left behind and apply to all estates except those in which the decedent died with a legally enforceable inheritance plan.
So who inherits from an intestate estate? The answer depends on who is surviving and the laws of the state in which the decedent died. All states have similar intestacy laws, but they can differ. Basically, the decedent’s closest surviving relatives will inherit the estate.
If you are single, unmarried, without children, and leave surviving siblings and parents, each surviving parent will receive an equal portion of your estate and your siblings will receive nothing.
But what if you leave behind a spouse, children, siblings, and parents? In Oklahoma and Kansas, your spouse and children will receive your estate, although the percentages may vary from state to state. If you live in Missouri, your spouse will receive the first $20,000 of your estate and half of the remainder, while the rest will be distributed between or among your children. If the children are minors, this can cause complications because funds allocated to your children normally are not available to your spouse to help raise them.
If you leave an intestate estate without any identifiable surviving relatives, the state will become the sole inheritor of your entire estate.
If intestate succession laws predetermine who inherits from intestate estates, who inherits from a testate estate? In other words, who inherits the property of a person who left behind a valid last will and testament?
The answer is dependent on the terms of the will. Assuming the will meets state legal standards, the person writing it—called a testator—can make almost any inheritance choices he or she wants.
Let’s take our example of a single, childless person who leaves behind siblings and parents. While the parents would inherit the entire estate if he or she died intestate, if the decedent left behind a will, he or she could leave the entire estate to one parent, equally divided between the siblings, to a friend, charity, complete stranger, or anyone else.
Intestacy and Estate Planning
What does this mean for you? While it’s up to you to decide if you want to create an estate plan, you are under no obligation to do so. IF you want your estate to be distributed in accordance with state intestacy laws, you don’t need to take any steps at all.
If you want to choose who inherits your property, make the inheritance process simpler for your family to navigate, or just make sure your wishes are followed, you can create an estate plan to accomplish these goals and control many other issues associated with getting older.
If you haven’t already done so, make an appointment to talk to us about your inheritance wishes and estate planning needs. It could be one of the best decisions you make this year.