Dying Without an Estate Plan – What Happens?
Volume 6 • Issue 1 • January 2016
The Counselor is a monthly newsletter of Hallock & Hallock dedicated to providing useful information on estate planning, business succession planning and charitable planning issues. In this month’s issue, we will look at what happens if you don’t establish an estate plan. If you are interested in learning more about the ideas and processes discussed in this newsletter, please contact us for an initial consultation.
Estate planning can be defined as a lifetime process where one can:
Control property while they are alive and well;
Take care of themselves and loved ones if they become disabled;
Give what they want to who they want, when they want, and the way they want; and
Do so with the lowest amount of professional fees and court costs.
Our ultimate goal is to help a client achieve their goals while eliminating concerns. A good estate plan will include a health care power of attorney, living will (sometimes referred to as a health care directive), financial durable power of attorney, will, and sometimes a trust. So, what happens if you are part of that group of people who have ignored the call to get an estate plan in place?
The reality is that no one actually dies without an estate plan. In the event a person fails to put a plan in place for himself or herself, their local state legislature has devised a plan. This is known as dying intestate. The attorney for the estate will look to local law to determine who is in charge, who receives your estate, and who gets your children. If you have property in more than one state, the laws of the state where the property is located will apply – not necessarily where you live.
Who’s in Charge?
The first question is - who will be put in charge of your estate? This is determined by looking at your local state law. In Utah, for example, the statutory priority would be as follows: (1) surviving spouse of the deceased, (2) other heirs of the deceased; and (3) any creditor of the deceased. An heir is someone entitled under the statutes of intestate succession to the property of the deceased. A court can appoint someone who does not have statutory priority, but it will require a more formal court process. Idaho has the same priority. Arizona, however, provides the priority is: (1) surviving spouse of the deceased, (2) other heirs of the deceased; (3) if the deceased was a veteran (or the spouse or child of a veteran) the department of veterans’ services, (4) any creditor of the deceased, and (5) a public fiduciary.
Who Inherits My Estate?
This is where many state intestate statutes begin to diverge. Because intestate laws are laws of general applicability, they apply to no one in particular. This means that they are not enacted to consider the unique nature of your particular situation. The first question is whether or not there is a surviving spouse. The next question is whether there are surviving issue. The definition of issue may vary from state to state, but it generally means a descendant. The next question is whether all of the surviving issue are also the issue of the surviving spouse. Clear as mud so far? How the estate is distributed will vary from state to state depending on the answers to these questions. If all of the issue are also issue of the surviving spouse he or she may get everything, this is the case in Utah and Arizona. But in others, like Idaho, it is not the case. Idaho adds the unique twist that if there are surviving issue they get one-half of the intestate estate. If there are no surviving issue, but there are surviving parents, the parents get one-half of the intestate estate. The surviving spouse only gets everything if there are not parents or issue. If there are surviving issue who are not the issue of the surviving spouse, the spouse will also have to share with the issue in both Utah and Arizona as well.
Who Gets My Children?
Dying intestate also means that any minor or disabled children will need a court appointed guardian and conservator. The courts are generally given broad discretion to appoint a person or persons to fill these offices. A nomination of the parent is given great weight and will generally be honored unless it is not in the best interest of the child. Without a nomination, the court will be left to sort out who will be best.
Everyone has an estate plan. If you have failed to make your wishes known through a properly enacted estate plan, your state government will ensure that its plan for your estate will be implemented. The question is which plan works better for you?
This Newsletter is for informational purposes only and not for the purpose of providing legal advice. You should contact an attorney to obtain advice with respect to any particular issue or problem. Nothing herein creates an attorney-client relationship between Hallock & Hallock and the reader.