Dying without a will happens more often than you might think. Aretha Franklin. Prince. Howard Hughes. Celebrity or not, if you neglect taking the time to compile a legal document that outlines your full and complete wishes for your assets and the minors in your care, there can be life-changing consequences for the people left behind.
These are the top three negative unintended consequences of dying without a will:
1. Your Heirs Must Spend Time and Money to Locate and Distribute Your Assets
As soon as the asset distribution process begins and your surviving loved ones realize you have no will, it’s going to cost them. With no personal representative (formerly known as an executor) appointed, a judge will have to determine who should locate and catalog all of your assets.
The individual chosen will be required to comb through bank statements, tax returns, email folders, file cabinets and more to get the details on policies, accounts and plans you own. This will take both time and money, and can be an exhausting process for a family member who is grieving. Not to mention, the person the judge appoints to administer your estate may not be who you would have preferred managing your private financial affairs.
Once all the assets are located, the probate court will have to determine how they are distributed. Even if there is no disagreement about what to do with the assets, the process itself can eat away at the value of your estate. It is estimated that the cost of the probate process can eat up 3% to 8% of the assets available leave to your loved ones. That means if your estate is worth $500,000, it could cost between $15,000 and $40,000 to get it through probate and to the point where your assets can be distributed. Compare this to the cost of a comprehensive estate plan, which is usually between $1500 and $3000 and you will see the value.
2. Intestate Succession Could Leave Your Assets to the Wrong Parties
When you die “intestate,” meaning “without a will,” your assets pass to your survivors according to intestate succession laws.
However, there are many assets that are not governed by intestate succession laws, including:
These assets will pass to the beneficiary named on the account or the other joint owner will assume full property rights after you die.
But all other assets, such as savings accounts, checking accounts, property owned by you solely, etc. will follow intestate succession laws:
These strict succession rules do not account for many individuals’ specific wishes, and that’s why a will is so vital. For example, stepchildren and foster children are not included in intestate succession unless you have legally adopted them. In addition, because the law assumes your spouse will provide for your children, the children will not receive anything directly. If your surviving spouse remarries down the road, and/or has other children, your children may not be fully protected with respect to the legacy you wanted to leave for them.
What if your first spouse dies and you remarry late in life? You may wish to leave the majority of your estate to the children from your first marriage. If you don’t devise a will to state just that, your second spouse will receive half of your assets. When they die, their assets (which now include 50 percent of yours) will pass to their children – not yours.
The bottom line is this: the intestate succession rules represent the state's best guess as to what most people would want. By definition this does not take into account your specific situation, family make-up, or wishes.
3. You Lose Control Over the Guardianship Choice of Minor Children
Dying without a will is most complex when there are children involved, especially when the children don’t have another living parent. If you don’t have a will that includes a named guardian you wish to care for the minor children, the court will appoint a person for this role. This person may or may not be suitable or ideal for this responsibility, and it may result in litigation between this individual and other relatives who are both vying for custody of the children.
Talk about an ugly situation. It’s avoidable when you leave behind a will with specific guardianship provisions in place to guarantee your children end up in the best scenario possible.
And, even in the best case scenario where a suitable guardian steps forward and there is no disagreement about that person, the simple fact that a court has to make the ultimate decision can prolong the process and delay your children's sense of permanence and security at an already difficult time.
Creating a will doesn’t have to be a painful, painstaking process. Work with slnlaw and see how we’re different. We know our clients are real people with real needs, and we believe a thoughtful, precise estate plan is sure to take a weight off your shoulders.