As an elder law attorney, 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.
When you pass away, 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.
The first rule is that a last will and testament controls assets that are solely in your name. This can be especially important when it comes to blended families. For example, 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.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Here is an example: A married couple have recently divorced, but they share a child. If the father signs a new will leaving everything to the child but names a sibling as a beneficiary of his life insurance policy, once he dies, that money will go to the sibling, not the child.
A law to keep in mind
Another rule that’s crucial to keep in mind is the law of intestate succession. That means if someone dies without proper planning, their estate will automatically go to their next of kin. 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.
This could be detrimental depending on the individual’s situation. Let’s say you and your spouse both die without a 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. For some families, that may not be the best option. Having a will in place allows you to place restrictions on how your children receive their inheritance. Maybe you don’t want them to have access to their inheritance until they’re older, or maybe you want them to use it for something specific, like education. You must clearly state that in your will. Otherwise, they’ll be entitled to use their inheritance however they want.
If you understand the rules, you can ensure that you create a plan that passes your estate down to the beneficiaries that you want and not unintended beneficiaries. So long as you have a will, you have the power to control how and when your beneficiaries receive their inheritance and who will be in charge of administering your estate. Without a will in place, those decisions will be determined by the law.
Why a complete estate plan is so important
As important as it is, having a last will and testament is only a part of the estate planning process. If you rely on just a will, your estate will have to go through probate, which can take months or even years, depending on the size and complexity of your situation. In addition, 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.
A good estate plan has the documents needed for any situation that might arise. This includes designating a medical power of attorney, a financial power of attorney, a revocable trust agreement that allows you to pass your estate down to your beneficiaries without the need of probate court and, finally, a last will and testament.
With a complete estate plan, you have the power to protect your estate while you’re alive, ensuring that your wishes will be followed once you’re gone.
Related Content
- 14 Rapid-Fire Estate Planning Tips
- 10 Things You Should Know About Estate Planning
- Common Estate Planning Mistakes
- Estate Plan Check-Ups: Don’t Just Set It and Forget It
- 2024 Uncertainty Highlights Need for Estate Plan Flexibility
-
The Fall Garden 'Tax': What to Plant and How to PrepareTax Tips Fall gardening could increase your taxes this season. Here’s what to know while planting in 2025.
-
July CPI Report Boosts Rate-Cut Odds: What the Experts SayThe July CPI report shows that tariffs are having a slight impact on inflation, though not enough to keep the Fed from cutting interest rates.
-
DST Exit Strategies: An Expert Guide to What Happens When the Trust SellsUnderstanding the endgame: How Delaware statutory trust dispositions work, what investors can expect and why the exit is probably more important than the entrance.
-
Think Selling Your Home 'As Is' Means You'll Have No Worries? Think AgainThere are significant risks and legal obligations involved in selling a home 'as is' and by yourself, without a real estate agent.
-
What the OBBB Means for Social Security Taxes and Your Retirement: A Wealth Adviser's GuideFor Americans in lower- and middle-income tax brackets, the enhanced deduction for older people reduces taxable income, shielding most of their Social Security benefits from being taxed.
-
Financial Planner vs Investment Manager: Who's the Better Value for You?When markets are shaky, who do you trust with your money? A recent study provides useful insights into the value that different financial professionals offer.
-
I'm a Financial Adviser: This Is How You Could Be Leaving Six Figures in Social Security on the TableClaiming Social Security is about more than filing paperwork and expecting a check. When you do it and how you do it have huge financial implications that last the rest of your life.
-
The Big Pause: Why Are So Many Americans Afraid to Retire?While new research sheds light on Americans' growing reluctance to quit work in later life, can anything be done to help those with the retirement jitters?
-
Five Under-the-Radar Shifts Investors and Job Seekers Can't Afford to Ignore Under the OBBBBeyond the headlines: The new tax law's true impact for job seekers and investors lies in how it will transform industries and create opportunities in areas such as regional accounting, AI and outsourced business services.
-
I'm a Financial Professional: It's Time to Stop Planning Your Retirement Like It's 1995Today's retirement isn't the same as in your parents' day. You need to be prepared for a much longer time frame and make a plan with purpose in mind.
