When people decide to not draft an estate plan, the rules of intestacy apply to the decedent’s estate. Most Americans pass away intestate, which means without a valid will. The decedent’s property passes to heirs which are determined by statutory rules, which establishes a default estate plan.
The interesting part about the intestacy rules is even if you have a will drafted and you have not formally disposed of the property in your will, the rules of intestacy will trigger. Under the Uniform Probate Code Section 2-101 (a) states, “any part of a decedent’s estate not effectively disposed of by will passes by intestate succession to the decedent’s heirs as prescribed in this Code, except as modified by the decedent’s will.” Other instances where the rules of intestacy will trigger are 1) never drafting a will, 2) revocation of a will without drafting a new will, and 3) failure to execute a will properly.
The intestacy statutes establish the following order to be distributed to the heirs: 1) surviving spouse, 2) descendants, 3) parents, 4) descendants of parents, 5) grandparents, 6) descendants of grandparents, and in some states 7) stepchildren, and 8) descendants of stepchildren.
As traditional relationships have changed over time, the new normal has been cohabitation, especially with divorced parties. Under the rules of intestacy, because the parties made the decision to not marry, cohabitation does not serve as a reliable proxy for testamentary intent. The Legislatures will not make an assumptions as to the intent of the cohabitants, since the decision to marry was not chosen.
There is a myth that most people believe and that is implementation of the intestacy statute is cheaper than drafting a will. Dying intestate can lead to undesirable, costly, and guardianship and administration battles, which would have been avoided by the simple execution of a will. Without a Will, the court must appoint a personal representative without the guidance from the decedent. The personal representative plays a vital role in the estate administration as this individual is given the express authority to liquidate the assets and property of the decedent in order to satisfy the creditors and the general bequests.
The issues can compound over time which can make division of property even more difficult. For example, John passes away intestate, his wife Betty takes the primary residence. However, Betty passes away intestate and John and Betty had 4 children. The 4 children all want to take the primary residence and reside there. Without a will, the personal representative has to sell the property and divide the money amongst the 4 children; therefore, no one is happy with what happened. This can also be tied up in court by the children as they fight each other.
It is best to spend the money to draft a Will and to aid your family from potentially spending more money than the cost of the Will. Furthermore, it is best to ensure your family is taken care of in the ways you want them taken care of.