Dying Intestate — Six Reasons Why Not
Various studies point out that almost 60% of Americans do not have a will and almost 70% do not have a medical health care directive or living well. In fact, a recent CNBC blog cited a study finding that 9 out of 10 people between the ages of 44 and 64 did not have even a basic will.
If you do not have a valid will, you will be deemed to have died "intestate" and each state in the US has intestacy laws that govern the distribution of your property upon your death should you die in that state. Therefore, if you die without a will, the state in which you live, following its intestacy laws, will write one for you.
What are the general consequences of Idaho writing your will?
FIRST, without a will:
- If you have no spouse, children, parents or relatives, both your separate property, and your share of any community property, goes to the state. Would a friend or charity perhaps be a better recipient?
- If you have a spouse and no children, or living parents, your property passes entirely to your spouse.
- If you have a spouse and children, your spouse receives all of your community property and half of your separate property. Your children receive the other half of the separate property.
In a second marriage, your children from the first marriage will share equally with the children of your second marriage. Also, your natural children, born out of wedlock, share that half equally with all of your children of your marriage or marriages.
- If you have a spouse and no children, and you have at least one living parent, your spouse receives all of your community property and one half of your separate property. Your parents inherit the other half of that separate property.
And if some of your property is illiquid – such as a business or interest in raw land, some of it might need to be sold to satisfy these distributions as well as satisfy any outstanding debts and costs of administering your estate. Therefore, it not may fetch the price it should if your estate or your beneficiaries could wait until a better time to sell.
And, because, each state has its own intestacy laws governing the distribution of property located in that state, if you have property in more than one state, more than one state's laws may apply- complicating the distribution of property as well as increasing the costs of administration.
Additionally, even if you know Idaho's current intestacy laws and you feel that your property will be distributed under those laws as you would wish, if you die after moving to another state, then that state's laws will determine who receives your property and that may not be as you would wish. Also note that intestacy laws are statutes that the legislature can change at any time so while current law might distribute your assets as you would wish, that could change in the future.
SECOND, if you die intestate, the state chooses who administers your estate. Your family or other interested relatives can make suggestions to the court, but the court decides. And, the appointment process of an administrator can be costly – particularly if different family members have different views about whom the court should appoint.
THIRD, if you name a person in the will to administer your estate, you can specify that no bond is required of that person. If the state appoints an administrator, it normally will require a bond from the administrator to protect potential creditors of your estate even if there are no creditors!
FOURTH, if the state determines the disposition of your estate, each person will receive his or her share outright (unless the person is a minor). Therefore, heirs could receive their share outright even if they do not understand how to handle money, even if they have creditors or even if, the receipt of their inheritance, without taking the required steps to create a "special needs trust", would disqualify them from certain state and Federal benefits.
Under your will you can specify that such property will be held in trust, and who should be the trustee. This can protect the property from creditors, disqualification from certain state benefits, a future divorce, or even, in the case of your incapacity, the state appointing a guardian or conservator of its choosing to administer the property for your benefit.
FIFTH, you can specify in your will who will be the guardian of your minor children and overseer of their property. If you do not have a will, the state will determine who that person or persons will be and there are court costs associated with the appointment.
SIXTH, even if your estate is currently small enough that no Federal estate tax will be due, the current Federal Tax law is only effective through 2012. After 2012, the situation could be different. And of course, state estate tax laws can change at any time. While Idaho currently does not have a state estate tax, that could also change at any time.
By leaving your estate planning up to Idaho, you may unintentionally make the Federal Government and certain state governments your largest heir. A will, properly drawn, could mitigate that risk.
Disclaimer: The foregoing is NOT legal advice. We have prepared these materials to inform and educate. They are not, and should not be considered, legal opinions or advice to anyone, nor do they create an attorney client relationship by your reading them. These materials may not reflect the most current legal developments in the applicable area of law. Furthermore, this information should in no way be taken as an indication of future results.