You are wise to undertake comprehensive estate planning, a process that can include taking steps like writing a last will and testament or setting up a trust. If a person doesn’t do any estate planning and dies without a will or trust, the deceased individual’s property passes to other people pursuant what are known as the laws of intestate succession. Every state has its own intestate successions, although there are similarities between them. You my wonder what happens if you die without a last will and testament.
Strategies to Pass Property at the Time of Death
Reference continues to be made to “dying without a will.” In fact, a will is not the only instrument or strategy through which property can pass to another individual after death. We did mention a trust as well as being a vehicle through which property can go to another person after death, that individual being called the beneficiary of a trust.
In addition to wills and trusts, other mechanisms through which property can be conveyed to another individual when you die include:
- Life insurance proceeds pass to a named beneficiary
- Funds in an IRA, 401(k), or other type of retirement account pass to a beneficiary
- Securities maintained in a transfer on death account
- Bank accounts that are payable on demand
- Vehicles registered jointly with a right of survivorship
- Real estate held in joint tenancy with a right of survivorship
If a will or trust isn’t in place and property remains after transfer via the mechanisms just listed, the laws of intestate succession come into play. For the sake of illustration, California intestate succession laws are used here.
Where Property Goes If You Die in California Without a Will
The California laws of intestate succession set forth which family members your property goes to when you die. The laws determine where your property goes depending on the living relatives you have alive at the time of your death. A summary of to whom property goes pursuant to the laws of intestate succession in California provides:
- If you die with a spouse but no children, parents, or siblings – spouse gets all property
- If you die with children but no spouse – property is divided equally between your children
- If you die with parents but no spouse, children, or siblings – parents get all property
- If you die with siblings but no spouse, children, or parents – property is divided equally between siblings
- If you die with a spouse and one child – spouse gets all community property and one-half of separate property
- If you die with a spouse and two or more children – spouse gets all community property and one-third of separate property
- If you die with spouse and parents – spouse gets all community property and one-half of separate property
- If you die with a spouse and siblings – spouse gets all community property and one-half of separate property
Community property are those assets that a couple accumulates during the course of a marriage. Separate property generally represents assets that were acquired before a marriage. With that said, a person might come into ownership of some types of assets during a marriage that might legally be classified as separate property.
Loss of Control
If you do no estate planning, you lose control over what happens to your assets after you die. You likely have specific ideas of what you would like to see happen with the assets you’ve accumulated throughout your life.
Oral Statements Mean Nothing
When it comes to distributing your property after you die, verbal directives are meaningless. What you verbally statements about what you’d like to see happen with your property mean nothing from a legal standpoint.
Lack of Estate Planning and Taxes
If you fail to undertake estate planning and have accumulated some assets, your estate and its heirs can end up facing unnecessary tax consequences. One of the main benefits associated with proper estate planning is that you are able to address potential negative tax implications that can exist in the absence of taking a suitable proactive stance regarding your property whilst you are still alive.
Funeral and Burial Directives
Some people incorrectly believe that you must spell out your funeral and burial wishes (disposition desires) in a last will and testament. You do not. This is one area in which you can orally convey your wishes to someone else (and hope that individual honors them). You are better served putting your funeral and disposition wishes into writing, but again that need not be contained within a will.
If you’ve the ability to do so, you might even want to consider undertaking funeral and disposition preplanning with a funeral home of your choice while you are alive. That’s something of a dreary task but you put yourself in the best position to ensure your personal wishes are carried out in regard to these matters.