What happens to your estate if you die without will?
Based on sheer statistics, dying without a will must be extremely common. While precise numbers are hard to come by, estimates are that barely one-third of all Americans even have a will, a number that actually represents a decline compared with last year.
We’ve written many times about this topic before here on the Blog. Still, when we encountered this recent Kiplinger article about dying without a will, we figured it was worth another discussion. The article was written by Michigan-based elder law attorney Patrick Simasko.
Die Without a Will, and No One Can Predict the Outcome
We confess that the opening paragraph in Simasko’s Kiplinger article made us really stop and think.
“As an elder law attorney,” he begins, “I am continuingly asked, ‘What happens if I die without a will?’ The most accurate answer is, ‘I don’t have a clue,’ and sadly, you probably don’t either.”
That degree of uncertainty can’t be what most of us want when we’re gone. “When you pass away,” Simasko writes, “you want your estate passed down to the beneficiaries you choose. But it’s not that simple. There are certain rules and procedures that are already being applied to your assets whether you realize it or not.”
Joint Ownership and Beneficiary Designations
Oddly, Simasko’s first example in his article isn’t about dying without a will. It’s about assuming your will carries more weight than it actually does.
“The first rule is that a last will and testament controls assets that are solely in your name,” says Simasko. In cases of blended families, this stipulation is especially important.
“For example,” he continues, “if a parent has a will leaving everything to his children from a previous marriage but has named his current wife as a joint owner or beneficiary over the house and financial accounts, then the will essentially becomes obsolete. This is because joint ownership and beneficiary designations supersede the will.”
The rule of beneficiary designation can be a shock when someone has married, divorced, and then remarried. It can potentially leave adult children out in the cold. At the very least, if disregarded, failure to update beneficiaries on life insurance policies, retirement accounts, and other similar instruments leaves your family in jeopardy of a protracted legal fight.
Dying Without a Will: What is “Intestate Succession”?
Simasko’s article quickly pivots back to the topic at hand: dying without a will. Here he introduces us to the law of intestate succession. “That means if someone dies without proper planning, their estate will automatically go to their next of kin,” he explains. “The law is state-specific, but generally follows the family tree. Your spouse will get most of it, and the rest will be passed down to your children.”
Is this the ideal situation? Maybe not, Simasko suggests. One example: what happens when both spouses die, and there’s no will in place?
“According to the law, your estate would automatically go to your children as long as they’re over the age of 18,” Simasko answers. “For some families, that may not be the best option.” With a valid will or trust, you and your spouse can place restrictions on how your children receive their inheritance, when they receive it, and what they are to use it for – education, for instance.
“You must clearly state that in your will,” Simasko advises. “Otherwise, they’ll be entitled to use their inheritance however they want.”
Having a Will or Trust: Only Part of the Overall Picture
We’re glad Simasko ends his article with the reminder that, as important as a will or trust is, it’s only a part of the estate planning process. For example, he writes, “a will has nothing to do with appointing someone to make your medical and financial decisions if you become unable to do so. This is why it is so important to have a complete estate plan in place.”
No doubt you’ve heard Rajiv talk about this repeatedly. While it’s true that a good estate plan will include all the documents needed – medical power of attorney, a financial power of attorney, perhaps a revocable trust agreement, and, finally, a last will and testament – that portfolio of legal paperwork won’t be enough to guide those you love through the maze they’ll face when someday they need to take care of you.
Rajiv: Unless You Prepare Your Loved Ones, They’ll Be Lost
Rajiv has dealt with issues like this thousands of times – so we asked him for his views. “I have two thoughts as I read this,” he responds. “First, I’m baffled by the number of people who claim they don’t need a will. But,” he adds, “I’m even more amazed at the people who think a will is all they need. Just write a will and your problems are solved. Absolutely untrue!”
He continues, “A will tells people what to do with your stuff when you die. Fine. But you’re far more likely to face a situation where you’re going to need a loved one to step in if you’re ill or incapacitated. They’ll have to coordinate your health care and figure out how to pay for it. They’ll have to pay your bills, maybe get your house ready to put on the market, pay your property taxes, pay your income taxes, possibly even deal with their angry step-mom and far-flung siblings and step-siblings. You’re handing them a time-consuming mess!”
Rajiv is adamant. “Yes, by all means, sit down with an attorney and draft a will. Go through your beneficiary designations and bring them up to date. Do all that stuff. But you also must plan for the day when you can no longer care for yourself. Will your loved ones know what to do so you can stay at home with the care coming to you and avoid being institutionalized?”
He ends on a positive note. “You can make sure that you and those you love will truly be prepared,” he asserts. “Let us show you how. Then you’ll have a complete estate plan.”
Rajiv Nagaich is the Trusted Voice About Estate Planning
When it comes to getting your estate plan right – whether you’re single or not, whether your estate is small, large or in-between – there’s no more trusted voice than that of Rajiv Nagaich. In more than two decades of legal practice, he has seen what can happen when an estate plan is either poorly designed or non-existent. In either case, the outcome will be a mess for those you leave behind.
Moreover, any good intentions you may have had concerning where your assets should go will probably be out the window.
For more insight into this issue, check out this important article by Rajiv – and find out whether your estate plan will help make your dreams come true, or send them crashing down!
Breaking News: Rajiv’s New Book is Here!
We have big news! The long-awaited book by Rajiv Nagaich, called Your Retirement: Dream or Disaster, has been released and is now available to the public. As a friend of AgingOptions, we know you’ll want to get your copy and spread the word.
You’ve heard Rajiv say it repeatedly: 70 percent of retirement plans will fail. If you know someone whose retirement turned into a nightmare when they were forced into a nursing home, went broke paying for care, or became a burden to their families – and you want to make sure it doesn’t happen to you – then this book is must-read.
Through stories, examples, and personal insights, Rajiv takes us along on his journey of expanding awareness about a problem that few are willing to talk about, yet it’s one that results in millions of Americans sleepwalking their way into their worst nightmares about aging. Rajiv lays bare the shortcomings of traditional retirement planning advice, exposes the biases many professionals have about what is best for older adults, and much more.
Rajiv then offers a solution: LifePlanning, his groundbreaking approach to retirement planning. Rajiv explains the essential planning steps and, most importantly, how to develop the framework for these elements to work in concert toward your most deeply held retirement goals.
Your retirement can be the exciting and fulfilling life you’ve always wanted it to be. Start by reading and sharing Rajiv’s important new book. And remember, Age On, everyone!
(originally reported at www.kiplinger.com)