But what if there is no will? According to LexisNexis, 55 percent of people die without either a will or a trust. Sometimes they assume everything will somehow magically work out the way they expect. Most people, I think, have in the back of their minds that they should have a will or some other kind of estate plan, but never get around to doing it. They may expect that probate will be involved and that there is nothing they need to do to expedite things. Isn’t it really a problem for the heirs?
If you don’t decide on an estate plan for yourself, your state laws have already made one for you. Not having an estate plan is somewhat like not voting. The law assumes that you must not care what happens and are willing to accept whatever everyone else decides; otherwise you would have done something about it.
The laws determining who gets what when a person dies without a will are called the laws of descent and distribution (or, the laws of intestacy). These state laws lay out the respective shares of the heirs of the deceased and depend upon whether the person was married or had children, or both. They vary from state to state, but the laws are similar. The text of the law in Appendix A is a typical example from Michigan, but a simple internet search for “descent and distribution” with the addition of your state’s name will give you specifics for your state.
Making your own plan to leave your assets at your death, by will or otherwise, can also avoid unintended inheritances. Suppose you have no children and your spouse dies, leaving business assets or accounts that were in her name alone. According to the rules in Michigan you would get “The first $150,000.00, plus 3/4 of any balance of the intestate estate, if no descendant of the decedent survives the decedent, but a parent of the decedent survives the decedent.” Do you really want to share your spouse’s separate estate with your mother-in-law? Most of us assume our spouse would be entitled to our assets if we die without a will, but that is just not always true.
Another typical situation: Your spouse has children, but none of them are your children, and then your spouse dies. In this case you would get the first $100,000 of his assets and one-half of the rest. This can create severe hardship on a surviving spouse who had been counting on all the assets for his or her support and maintenance for life.
Now, if you and your spouse jointly own everything and are each other’s beneficiaries, it is true there would be no probate at the death of one of you because there are no separately owned assets remaining at the death of the first spouse. But what if you each have separate assets, like business or partnership interests or private bank or investment accounts? In that case the intestacy laws apply. And at the death of the survivor, probate would likely be inevitable, and your heirs will not only get just a partial share but will be shouldering the costs of probate as well.
