We’ve all heard how crucial it is to have an estate plan in place before you need one. But the reality is that many people don’t think about creating an estate plan until later in life. In the case of tragic circumstances, this can be an incredibly costly mistake that can also be emotionally draining for your family and friends.
What Happens When There is No Estate Plan in Place?
All states have a legal process for determining the inheritance of property when someone has died intestate, or when there is no will or estate plan in place. If you happen to own assets in multiple states, each state law regarding intestacy inheritance will go into effect. Assets may include bank accounts, real estate securities, and other personal assets.
While these state laws vary slightly, they commonly follow the same pattern by awarding assets to a surviving spouse and children first. If you are unmarried and without children, assets will then likely go to parents. If your parents are also deceased, siblings would be awarded property, and if for some reason, there are no surviving siblings, the court would look at nieces and nephews or other extended family members. If no relatives can be found, then the entire estate usually goes to the state in which it is physically located.
The process can be complicated in scenarios where an individual is in a domestic partnership. Only some states recognize domestic partnerships. Without a will or estate plan in place, there is no guarantee that this individual will receive any of your assets or belongings. This fact is true even in instances where couples have resided together for decades. If you fit into this scenario, it is vital that you check to see how your state treats domestic partnerships. If they are not recognized, it’s even more crucial that you plan ahead and develop an estate plan that ensures the one you love will be considered a beneficiary upon your death.
Can I Just Draft a Last Will and Testament?
You could, but a will often still means that your property will go probate court before any terms of the will are fulfilled. The timeline to go through probate court commonly ranges from six months to several years, depending upon the size of your estate, your state laws, and how many beneficiaries are named in your will. If certain aspects of your will are contested by surviving loved ones, the process can take even longer.
It is best to avoid the probate process when possible since none of your loved ones will have access to any of your assets until the entire probate process is completed. Unfortunately, this commonly means that your assets would be unavailable for funerary services or to hire a probate attorney, which is common when a will goes to probate court. This scenario puts surviving loved ones in the position of paying for these expenses out-of-pocket, adding to their existing stress and grief.
How to Avoid the State’s Intestacy Process?
The process for determining intestacy inheritance or going through probate is clearly something everyone would like to avoid, if at all possible. It can be costly, time-consuming, and emotionally draining. Fortunately, getting an estate plan in place is usually much easier than people think. An experienced and skilled estate planner can discuss options for your assets that avoid probate, such as a revocable living trust. Having these financial tools in place ensures that your property will pass directly and immediately to your loved ones without minimal court and state involvement.
A trusted estate planner can also discuss a strategy for ensuring that you avoid some of the common pitfalls that undermine the legality of your plan for the transfer of your assets, including:
- Ensuring that your trusts are funded.
- Coordinating all assets, including trusts and retirement plans.
- Discussing when it is necessary to update your beneficiaries (commonly required when there are births, deaths, marriages, or separations in your family).
- Updating asset ownership when new assets are acquired, or older ones are sold.
- Ensuring that you have updated powers of attorney.
- Updating the overall plan on a regular basis.
Estate planners can help you easily create and update your estate plan to ensure that your beneficiaries don’t have to go through the complex and difficult process outlined by the state in the event that you don’t have an estate plan in place. No matter your age or health, if you own assets, it’s time to create an estate plan.