Dying Without a Will in Massachusetts
What Happens if You Die Without a Will?
This is really the question, isn't it? What happens if you do nothing about your estate plan and something happens to you. Many people are afraid to ask this question, but it is very important.
The short answer is this: If you do not make a plan, and if you die without a will, Massachusetts estate law will create a plan for you. This very often is not what you want. Without a comprehensive estate plan, your family will also have to go through a more cumbersome process in the courts to distribute your assets. Finally, you will lose the opportunity to minimize or avoid estate taxes.
Asset Distribution Without a Will
There are some things you can do without a will. If you and your spouse own your home jointly, the surviving spouse will automatically take title. The same is true for joint bank accounts.
Many accounts also allow you to designate a beneficiary. Retirement accounts typically have beneficiary designations. Many other banks and financial institutions will allow you to fill out a "payable on death" designation.
Life insurance proceeds will also pay out according to your designations.
Distribution of Probate Assets
Probate assets are all of the other things that you own that need to go through probate before distribution. This includes personal property, any collections of value you have, interests in a business, and any cash, investments or real estate that you own in your own name.
These assets make up your estate. Your estate will be divided according to Massachusetts intestacy laws. "Intestate" means a person who does not have a will.
You can read about how state law divides property when a person dies intestate in more detail here. Generally, the law will distribute everything to your surviving spouse if you are married and have no children born from another marriage or relationship. If you have no spouse or children, your assets will be divided by closest family members, starting with parents, then siblings, then cousins.
Beyond Distribution of Assets: What it Means to Your Family if You Do Not Have an Estate Plan
There are other important things that a will, or a combination of wills and trusts, can do for you and your family members.
Management of assets for minors. A child under the age of 18 cannot receive money directly. If they are receiving assets under the intestacy laws, someone will have to set up a trust for your children to receive the inheritance. It is easy to set up a trust in your estate plan that takes care of this ahead of time. You will have the ability to choose the trustee. You will also be able to set whatever guidelines for use and distribution of the funds that you think is in the best interests of your children.
Estate taxes. By not creating a plan, you may be missing opportunities to avoid or minimize estate taxes. In Massachusetts, your taxable estate will include retirement funds, life insurance, and other assets even though they pass automatically. This means that if you have a significant life insurance policy, equity in your home or other real estate, and retirement plans for you and your spouse, you may well exceed the $1 million threshold for the Massachusetts estate tax. Your estate planning attorney can help you combine wills and trusts and gift strategies that take advantage of tax exemptions to protect your family from this cost.
Probate process: if you do not have a will, your family members will have to go through the probate process to distribute your estate. This will include asking the court to appoint a personal representative. If you have minor children, they will also have to ask the court to decide who will be their guardian. These are both things you can designate in your will. If you also use trusts in your estate plan, you can reduce or even eliminate in some cases the need to involve the probate courts. 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.
Your own disability or incapacity: an elder law or estate plan should also account for what happens if you or your spouse become incapacitated. A durable power of attorney allows you to identify someone to make financial and legal decisions if you are incapacitated. A health care proxy allows you to identify someone to make medical decisions for you. Depending on where you are in life, you may also want to consider the use of an irrevocable trust to protect your assets in the event that you need long term care or nursing home care.
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