Everyone has a Default Estate Plan

It is amazing how many people believe that when someone dies without a Last Will and Testament the surviving family (and mistresses) are paraded in front of a judge and possibly even a jury to argue who the decedent loved more.  I hate to burst the bubble of anyone who loves “legal” TV shows but is not what happens.  When someone does without a Last Will and Testament they are said to die intestate and their is an estate plan.

What is Intestacy? What is the Default Estate Plan?

Intestacy, much like a Last Will and Testament, only controls those assets which do not pass by deed, operation of law or contract.  So your 401(k) or life insurance would only pass pursuant to your State’s intestacy law if you didn’t have a named beneficiary (or you named your Estate as beneficiary). Every State has some sort of distribution schedule based on the family dynamics of the decedent to avoid the made up TV scenario above.

Your State’s Intestacy Law

I found a cool website that lists every intestacy statute called, My State Will. Each State distributes assets by intestacy differently. So you will have to check out your own State:

Lets take a look at New York for example.  The intestacy law is covered by EPTL 4-1.1 and distributes assets as follows:

  1. Spouse and No Kids – Spouse gets it all
  2. Spouse and Kids – First $50,000 to your spouse and then one-half to your spouse and one-half to your children;
  3. Kids No Spouse – Kids get it all
  4. No Kids, No Spouse – Decedent’s Parents
  5. No Kids, No Spouse, No parents – Your Siblings
  6. No Kids, No Spouse, No Parents, No Siblings – One half to maternal grandparents and one half to paternal grandparents
  7. Then work your way down to aunts, uncles, nieces and nephews.

Re-read number 2.  Yes, you read that correctly. If a New York domiciliary were to die his assets which do not pass by deed, ownership, or contract would be basically split between the surviving spouse and children.  Whose testamentary intent is that?!

Avoiding the distribution schedule of intestacy is only one of many reasons everyone should have a will.

 

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