A will provides a set of instructions for distributing assets after an individual’s death.  When you die without a will, however, no such instructions exist.  The text below answers a number of questions that individuals have regarding the consequences of dying without a will.

Dying Without a Will: Who’s In Charge?

Being the executor of an estate is an important and powerful role. Executors handle all the affairs of the estate, such as paying creditor claims, inventorying estate assets, and distributing property to heirs.

Whether you name an executor in your last will and testament or the court appoints one on your behalf, choosing the administrator of your estate is not a decision that should be taken lightly.  Your executor should be honest, ethical, and economically responsible.  This person must be capable of understanding both the probate process and their duty to the heirs of the estate.

When no will exists, or the deceased fails to name an executor in his or her will, the probate court will appoint one for the estate.  Every state provides an order of priority that judge’s must follow when appointing an executor. Most states make the surviving spouse the first choice for executor. If you do not have a spouse, the court will likely appoint an adult child as administrator, followed then by other family members.

No matter how competent a judge may be, no court knows your family the way you do.  When you create a will, it is important that you choose an executor that you know to be trustworthy and responsible.  Failing to name an executor in your will may result in the court appointing someone with a history of dishonesty or aggression towards your family.  The wrong executor may mismanage your assets, alienate family members, and cause expensive litigation.

You can optimize the chance that your estate administration will go smoothly by carefully choosing an executor and explicitly naming that person in your last will and testament.

Dying Without a Will: Who Gets What?

Without a will, the laws of intestate succession determine the distribution of your assets upon your death.  Typically only spouses, registered domestic partners, adopted children, and blood relatives may inherit under the laws of intestacy.  Unmarried partners, friends, charitable and religious organizations, and academic institutions do not receive anything. If the court determines that no surviving relatives exist, the state may take the assets.

Intestacy laws often do not reflect a decedent’s wishes.  Most intestacy statutes do not account for step-children, friends, unmarried romantic partners, and charitable or religious institutions.  If you are separated, but not yet legally divorced, the laws of intestacy may mandate that your soon-to-be ex-spouse receive half of your assets.

Any heir who is over the age of 18 receives his or her distribution outright.  The laws of intestate succession do not account for the financial irresponsibility of teenagers, nor do they account for disability or welfare benefits.

Dying Without a Will: Who Raises the Kids?

If you die without a will, a probate judge will appoint a guardian for your minor children.  Judges base this decision on the “best interest of the child,” typically giving preference to close relatives.

A judge’s opinion is not an adequate substitute for a parent’s.  Judges often suffer from a lack of time and information, and cannot be said not truly know your children, your family, or what you value most in life.

Dying Without a Will: What About Taxes?

The Federal Government exempts individuals with less than $5.45 million in their estate from paying federal estate tax.  This means that children may inherit up to $10.9 million from their parents, tax free.

State estate tax exemptions are typically much lower than the federal exemption.  Furthermore, over thirty states do no impose an estate tax at all.  For those that do, individuals must be mindful of the tax exemption and plan for their estate accordingly.

Though having a will will not help you avoid taxes, estate planning often can. Most people want their hard earned dollars to go to their loved ones, rather than being wasted on taxes. Therefore, it is important to be mindful of your tax liability and customize your estate plan to your needs.