Here is a misinformed statement we hear all too often: “When I pass away, all of my assets are going to be passed automatically to my spouse and kids.”
According to Caring.com, more than half of Americans don’t have a Will, let alone an Estate Plan of any sort. There are several cited reasons why people haven’t gotten around to Estate Planning yet. However, many of these reasons are rooted in misconceptions and misinformation.
Today we will talk about the common misconception that your assets will automatically pass as intended when you pass away. There is a legal system that will determine how your assets should be distributed, but it may not be in the way you would have wanted. We’ll also go over how to set up an Estate Plan so that you can maintain control over your legacy.
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Myth: My Assets Will Pass Automatically to Loved Ones Even If I Don’t Have a Will
Many people assume that they don’t have to have an Estate Plan because if they were to pass away, their assets would be distributed automatically to their spouse and children. While there is some truth to this, the full truth would not give the average American any peace of mind.
When someone dies ‘intestate’ (the term used to describe a person who dies without a Will), the matter of distributing their assets is left completely up to the courts. The probate court assigned with settling the deceased person’s estate will use the intestate succession laws, which vary from state to state.
These laws determine an inflexible method of asset distribution that may not align with your wishes.
Issues that can Arise when Intestacy Laws are Used
In the State of California, a community property state, intestacy laws designate that your children will inherit everything if you do not have a living spouse. If you have a living spouse but no children, then your spouse will inherit everything. Things are straightforward up until this point, but can get complicated when you add more entitled family members to the mix. Then, the court will use next-of-kin rules to split up your community and separate property in varying proportions.
If you’re lucky enough where your wishes align with intestacy laws, then you’re in luck. However, most people’s wishes are not so simple. For instance, they may have a blended family with ex-spouses or step-children, or they may want to leave money to someone who isn’t a blood relative. Further, what if the court distributes your inheritance to an estranged family member who you frankly don’t believe deserves the money?
These are a few examples of what could potentially go wrong when someone does without a Will. Here are some other issues that may arise when intestacy laws are used:
Delays: Before COVID-19, the probate process was already slow. In California, for example, the probate process wait time was eight to twelve months at best. Over 700,000 Americans have passed away from COVID-19, and likely two-thirds of them are without a Will. These deaths led to a dramatic spike in probate cases and with the absence of estate plans, the cases are taking even longer. As a result, families are forced to wait a year, if not more, to receive their inheritances. If you have been avoiding working on your Estate Plan, it may be motivating to think about the possible negative outcomes and consequences it may have on your loved ones.
Family Conflict: A Will is a surefire, legal way to use your voice for a time when you are no longer able to communicate. In the absence of a Will, your family members will not know how you would have wanted your assets distributed, nor your intentions behind your decision-making. Even if conversations were had, nothing is in a legally valid form of writing to prove it. More often than not, this can lead to outcomes that leave someone unhappy. In the worst cases, this could lead to family disputes and infighting.
Executor Appointment: When a deceased person leaves no valid Will, that means that they’ve also failed to appoint their Executor. The Executor is the person who is given the responsibility of administering the decedent’s estate. The probate court will then use state laws to appoint the person who will serve as the Executor. Typically, the spouse or adult children are named. It can already be an issue at this point if you would have designated a different person, or wanted to protect a particular person from the stressors of administering an estate. It is also possible that the court could appoint an unknown person or even creditors.
Make Your Wishes Known by Creating a Will
In the section above, we touched on all the reasons why probate court in the absence of a valid Will could go wrong. If you pass away without a Will, it means that you don’t get to use your voice when it matters. Intestacy laws may create good outcomes, but only if you’re lucky.
Here are 5 benefits of creating a Will in the context of probate court and intestacy laws:
When it comes to something so important as leaving assets and property to loved ones, who would you rather have control? Do you want to leave everything in the hands of the probate court, or do you want to have a say? By creating a valid Will, it allows you to exert control over what happens to your legacy even when you are no longer around. This means that you can have peace of mind knowing that when you pass away one day, your estate will be distributed in the way you would have wanted. Further, you get to use your opportunity to designate your Executor so that you know that the process of distributing your estate is in good, trustworthy hands.
2. Make Your Wishes Known
Some families may have open and honest communications about death and what happens after death, but many do not. Death is an unpopular subject, and understandably so. But what this also means is that many individuals keep their truest and most authentic ideas surrounding their own death to themselves. Your Will is your opportunity to make these ideas known post-posthumously. It allows you to leave instructions in writing that are legally-binding, so that no one will be confused over what you would have wanted. This helps alleviate doubt, confusion, and oftentimes conflict.
Probate is a long-enough process as it is; if you were to die intestate, this means that the courts would need to comb through your records to inventory your assets, consult with intestacy laws, decide how to distribute your assets, and go through the process of identifying an Executor. Any disputes could push the adjudication process out even further. By establishing a Will, you can ensure that the process will be as efficient and streamlined as possible.
4. Blended Families
Intestacy laws exist for a reason. If a person dies without a Will, then intestacy laws are used to distribute assets in a default manner that are, in a perfect world, logical and just. However, families are seldomly traditional these days. Blended families are more and more commonplace, where couples remarry and raise children from current and prior relationships. Especially in these cases, intestacy laws may not do your unique circumstances any justice, especially when you bring common property and separate property into the mix. If you have a specific game plan for how you’d want your assets divided amongst your children, step-children, or even an ex-spouse, it’s critical to document your wishes in the form of a Will.
5. Non-Traditional Asset Distribution
Last but not least, intestacy laws don’t account for property distributed in non-traditional ways. For instance, what if you wanted the entirety of your estate passed to a charity? What if you have an estranged parent that you haven’t spoken to in ten years — are you comfortable with your estate going to them if you don’t have a spouse or children? These are examples of unique cases that are not accommodated by intestacy laws. Again, any particular wishes must be documented in a Will.
Protect Yourself & Your Loved Ones by Setting Up A Will Today
The majority of Americans today don’t have a Will or any other form of estate planning document. Although they may cite many reasons (most are misinformed), the root cause is likely a lack of understanding of how much power an Estate Plan can hold
By having a Will, you get to exercise your voice even after you’ve passed away. You retain control over how your property is distributed, instead of giving up all the power to the court system. By doing so, you are better protecting your family and ensuring that property and assets end up in the right hands.
Further, by planning your estate, you’ll quickly learn about other powerful tools at your disposal. For instance, this guide may have helped you realize just how much of a headache probate court can be. Is there any way you could avoid probate altogether? The answer is yes! Many families choose to move assets into a Trust so that they do not go through probate.
Now, back to the main question: won’t my assets pass automatically to my spouse and children? This guide revealed how yes, the probate court system does have a framework for deciding how to distribute assets in the absence of a Will. However, we also demonstrated several reasons why this could all go wrong. Because you haven’t exercised any control, the court may make decisions that don’t align with your wishes. The sole method of making sure your wishes are known and ensuring your legacy is protected is by creating a Will and other estate planning documents.
Find out how to create your Will through Trust & Will today — you might be pleasantly surprised to find out that it’s affordable and can be done online from the comfort of your own home!
At Trust & Will, we’re here to help you keep things simple. You can create a fully customizable, state-specific Estate Plan from the comfort of your own home in just 20 minutes. Take our free quiz to see where you should get started, or compare our different estate planning options. Get started today!
Want to read more from our “Myth Buster” series? Click the links below to follow along as we break down these other common estate planning myths:
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