Death is an inevitable part of life, and while it’s not a topic most of us like to dwell on, it’s essential to plan for the distribution of your assets when the time comes. A last will and testament is the most common tool for doing this. However, not everyone gets around to creating one, leading to a situation called intestacy. In this blog, we’ll explore what intestacy is, how it affects the distribution of assets, and why it’s crucial to have a plan in place.
What Is Intestacy?
Intestacy occurs when a person dies without a valid will or any other form of estate planning document in place. In such cases, the distribution of their assets is determined by the laws of the state or country in which they reside. These laws are known as the laws of intestate succession. Essentially, intestacy outlines a default plan for asset distribution when an individual has not specified their wishes through a will or other legal means.
How Does Intestacy Work?
The specific rules governing intestacy can vary significantly from one jurisdiction to another, but they generally follow a hierarchy of heirs. Here’s a simplified breakdown of how intestacy typically works:
Spouse and Children: In most cases, the surviving spouse is the first in line to inherit. California is a community property state, so if there is no trust or will, then the surviving spouse inherits all community property (property acquired during marriage, unless there was a prenuptial agreement or something else). However, if there was separate property (property owned prior to marriage and kept separate, or received by inheritance or gift), and if there are surviving children of the person who died, they will also be entitled to a portion of the separate property. If there is one child, then 50% goes to the surviving spouse, and 50% to the one child. If there is more than one child, then 33.3% goes to the surviving spouse and 66.6% is split equally between the children. In a blended family situation, this gets really difficult because the kids of the person who died want to argue that the property was separate and the surviving spouse wants to argue it was community. Really, really important to do estate planning in California if you are a blended family!
Parents: If there is no surviving spouse or children, the deceased person’s parents may be next in line to inherit.
Siblings: If there are no surviving spouse, children, or parents, the estate may pass to the deceased person’s siblings or their descendants.
Extended Family: If there are no surviving close relatives, more distant relatives may inherit the estate.
Escheat: If no living relatives can be identified, the estate may ultimately escheat, meaning the assets are paid to the state or government.
The Importance of Estate Planning
Intestacy may seem like a simple fallback option, but it can lead to serious complications and unintended consequences. Here’s why having a will or estate plan in place is crucial:
- Control Over Your Assets: With a will, you have the power to decide exactly how your assets will be distributed. Without one, the state’s laws dictate the outcome, which may not align with your wishes.
- Avoiding Family Disputes: Intestacy can lead to family conflicts and disputes, especially in the blended family situations (his kids, her kids, our kids) and there is separate and community property, or if multiple heirs have different interpretations of what the deceased person would have wanted.
- Efficiency: The probate process for intestate estates can be more time-consuming and costly, as the court must determine the rightful heirs according to the law.
- Protection of Minor Children: If you have minor children, a will allows you to appoint a guardian of your choice. Without this provision, the court will decide who cares for your children.
- Tax Planning: Estate planning can also include strategies to minimize tax liabilities, ensuring that your heirs receive more of your assets.
- Charitable Giving: If you have philanthropic intentions, a will allows you to leave a portion of your estate to your chosen charitable organizations.
Intestacy is a scenario that can be avoided with proper estate planning. By taking the time to create a will or engage in other estate planning measures, you can ensure that your assets are distributed according to your wishes, minimize potential conflicts among family members, and provide for your loved ones in the best possible way.
Let an Attorney Helps You
Remember that estate planning is not just for the wealthy; it’s a responsible and considerate step for individuals of all financial backgrounds. Consult with an attorney or estate planning professional at Lawvex to help you create a plan that reflects your values and priorities, protecting your legacy for future generations. Don’t leave the distribution of your assets to chance—take control of your financial future today.