No matter how little property you have, if you leave something behind after death, you have an estate. An estate, essentially, is the totality of everything you own. When someone dies without an estate plan, their property falls into intestate succession.
In intestate succession, the state seizes control of your property and doles it out to your next of kin. On paper, it is a completely reasonable system. First, your assets go directly to your spouse. If you have children, your spouse shares the assets with them. If you are unmarried and have no children, your property goes to your next closest relative, starting with parents, then siblings, then more distant relatives such as cousins, uncles, aunts, etc.
As we will see, however, this is not a one-size-fits-all solution. Depending on your circumstances, intestate succession can cause many problems.
Situation 1: You Are Estranged from Your Family
These days, many people believe that blood relatives aren’t necessarily “family.” We know more about abuse and trauma than we ever did, and many choose to cut connections with their families. Perhaps you are unmarried, and you have a group of friends that is more supportive than your relatives ever were. If your assets fall into intestate succession, these people will be left out of your estate.
Perhaps the estrangement didn’t come from you. Maybe a parent was unable to care for you, and you were raised by a loving aunt or uncle. With your blood parents still living, they will be entitled to your assets, leaving out the person who was your caregiver.
Situation 2: You Have Children
If your children are over 18, intestate succussion will give them their portion of your estate, but you can’t control what that portion will be. If the children are under 18, their portion goes to someone who manages it for them. This person could be your living spouse, or it could be someone appointed by the court, a person with no vested interest in the family or the estate. This person can manage the money how they see fit, even paying themselves with it. Once your child turns 18, their inheritance could be very different from how it began.
There is another consequence of having no will, one that has nothing to do with property. Without a solid estate plan in place, you cannot control what happens to your children. In the best-case scenarios, they will be left with your parents or siblings, as they are the closest relatives. As we’ve discussed, however, these may not be the best people for the job. In the worst-case scenarios, your kids could be left with professional guardians, strangers to them. They could even be separated, each going to the care of a different person.
Situation 3: You Have Undetailed Records of Your Debt
Intestate succession goes through the court. As such, it becomes a matter of public record. Predatory actors often scour announcements of recent deaths. Then they contact the surviving family members, claiming to be the deceased’s creditors.
If you’ve done thorough estate planning, these vultures will have a difficult time fooling your beneficiaries. There will be records of your expenses, and it will be easier to verify who still needs money from your estate.
If your property goes into intestate succession, it’s handled by disinterested third parties. Your estate is just another to be marked off the list before moving on to the next job. Certainly, some people take their jobs seriously, and they can stop predators from robbing your family. Alternatively, the executor could be bored, burned out, and close to retirement. They might just assume anyone who contacts you is legitimate, giving your money to thieves.
Situation 4: Your Finances Contain Sensitive Information
Speaking of the public record, consider this: When your assets are handled by the state, every part of your financial records goes public. For many, this may not be a big deal. For others, there may be secrets they wish to take to their graves. Anyone can access your finances after intestate succession, from friends to family members to total strangers. You might not experience the backlash of your secrets going public, but your living loved ones certainly will.
Avoiding Intestate Succession
To avoid the potential strife of intestate succession, begin planning for your estate today. For passing your property down to deserving beneficiaries, you have two strong options, a will and a trust.
With a will, you pass along your property all at once. The process of transferring your assets is called probate, and it is handled by an executor. This person manages your leftover debt and bills, and then they give remaining assets to the appropriate beneficiaries. The probate process can be lengthy, depending on the specifics of a will.
A trust can operate as an independent entity without you. They are a good option for large estates. You can appoint trustees to invest the estate’s money and allow it to grow. A trust can also hold property until a certain time. For example, your child can get the car when they turn 16. You can even put your beneficiaries on allowance, giving them money on a schedule. A trustee can even cut off a beneficiary who is squandering their inheritance.
Depending on your needs, you can use a will and a trust together. For example, the will can name the child’s guardians in the event of your death, while the trust manages the finances. Perhaps you have some specific, sentimental items you’d like to pass along, and a will makes that transfer easier.
Proper estate planning prepares for more than just your death. In the event of incapacitation, estate planning can name your caretakers. One person can have power over your finances, and another can control your healthcare. If you want, you can give both jobs to the same person. Your plan can grant them the ability to pay themselves, making your care a full-time job, and you can limit what powers they have. You have almost limitless options for how to manage your health and wealth when you can no longer make those decisions.
The sooner you can begin planning for the future of your estate, the better. You are always free to make alterations as life changes, but having a plan in place now can protect you, your assets, and your family.
For help with estate planning, trust our firm to guide you through the process. We are ready to help ensure your wishes are carried out. You can call us at (916) 299-3936 or contact us online.
