You have no doubt heard the expression, “You can’t take it with you.” But what happens to the assets you must leave behind if you don’t have a will or other estate plan? In that case, dying without a will can cause your assets to pass by what is known as “intestate succession.”
Even dying without a will requires your assets to go to someone. Every state, including Minnesota, has a law that dictates who will inherit assets if the deceased person (decedent) dies without a will. This law of intestate succession is designed to approximate what most people would do if they had chosen to make an estate plan. In other words, the decedent’s estate goes to their closest relatives. If there are no close relatives, more distant relatives inherit. If there are no relatives who can be found, estate assets go to the state.
Not every asset passes by intestate succession; only your probate assets do. If you have a joint bank account with someone, the survivor receives the account without any action by the probate court. Likewise, a house that you own as a joint tenant passes automatically to the survivor, and assets in a trust pass to the named beneficiaries of the trust. If you have a retirement plan, the assets in the plan become the property of the beneficiary you designated.
But assets that you own in your sole name, such as bank accounts, vehicles, real estate, stocks and bonds, artwork, clothing, jewelry, and personal effects, go to your “next of kin.” Unsurprisingly, if there is a surviving spouse, most or all of the estate goes to him or her.
Dying without a will means that if the decedent had no surviving descendants, the spouse inherits the entire estate. The surviving spouse also inherits the whole estate if all descendants of either spouse are also descendants of the other spouse. In other words, neither spouse has children, grandchildren, or great-grandchildren from previous relationships.
If either spouse had descendants who are not also the other spouse’s descendants, the surviving spouse inherits the first $225,000 from the estate, plus half of the remaining balance. Any part of the estate that doesn’t go to a surviving spouse goes to the deceased person’s descendants. Those descendants are typically children or grandchildren who would inherit by representation. “By representation” means that all members of the same class, such as children, receive an equal share.
What if the decedent didn’t have any children or grandchildren? In that case, the estate that would have gone to a descendant goes to the decedent’s parent or parents. If neither parent survives the decedent, then their share of the estate goes to their descendants--the decedent’s siblings or half-siblings or their surviving children or grandchildren. If there is no one in that class, next in line are grandparents, or their descendants if no grandparents survive.
To recap, the people who would inherit from your estate if you die without a will are, in order: spouse and/or children, parents, siblings, nieces/nephews, grandparents, aunts/uncles, cousins. This order of intestate succession is close to what many people would do if they did make a will. So, given the laws of intestate succession, why do you need to make an estate plan?
Intestacy laws may accomplish roughly the same result as most people would pursue with an estate plan. That said, you should still have an estate plan, for the following reasons.
Minnesota intestacy laws will dictate a distribution of your property when dying without a will. But they don’t address all of the issues that an estate plan does. For instance, by making a will, you can name a guardian and an alternate guardian for your minor children. If you die without a will and your young children don’t have a living parent who is able to care for them, the probate court will appoint a guardian, and it may be someone you would not have chosen. In addition, you can use a will to name a personal representative for your estate. A personal representative settles your estate’s finances and makes sure that your wishes are carried out. Without a will, the court decides who oversees your estate.
Furthermore, intestacy laws address what happens to your property after death, but do nothing to help you if you become legally incapacitated during life, such as by a sudden injury or accident. In order to have someone in place to make medical or financial decisions for you when you cannot, you need powers of attorney as part of your estate plan. Otherwise, again, the probate court will need to appoint a guardian and/or conservator for you, and it may not be a person you would want in that role.
Intestacy laws are intended to approximate what most people would do if they made an estate plan. If you want to leave some of your estate to people who are not your biological relatives, intestate succession will not accomplish that. If you have a partner to whom you are not married, a favorite charity you want to support, or a dear friend to whom you want to leave personal property, dying without a will will not give them your inheritance, so you must have an estate plan.
When you make a will, you create a blueprint for how your estate should be handled. The beneficiaries of the estate are clearly identified, as are their bequests. When there is no will, the court must go through the process of identifying and notifying heirs, and making sure no one is excluded from the process who should have the opportunity to participate. That takes time and resources, and draws out the probate process. Who suffers? The loved ones who will (eventually) inherit from your estate.
The real reason you have an estate plan isn’t to distribute your assets. It’s to create peace of mind for both you and your family. You will know that your family is provided for and that the people you trust are making the important decisions. Your family will have peace of mind that they know your wishes and can carry them out. And creating a will can also prevent bitter arguments between family members over the distribution of your estate.
At its most essential, estate planning is about protecting people and relationships. Intestacy laws are a good backstop, but no substitute for an estate plan designed for your needs. If you have been putting off making an estate plan, take the first step and contact an estate planning attorney, for your family’s sake as well as your own.