27 Aug Dying Intestate is Not a Plan
Aretha Franklin died at the age of 76 and although she had been ill for many years she left no will. The papers have once again been replete with stories of the rich and famous who fail to get around to planning for their eventual death. According to AARP approximately 60% of adult Americans do not have a will or trust. In the absence of a valid will or trust document, the state steps in and determines how the estate will be distributed; this is what is known as dying intestate. State intestate laws vary greatly from state to state and how assets get distributed will be determined based on where one lives (domicile) and where property is physically located (situs). Generally close relatives (surviving spouse, descendants, parents) will be the beneficiaries based on the probate code. However, if there are no qualified living beneficiaries, the estate will by default be transferred to the state. Of course, family circumstances differ and very few people would be comfortable with letting the state decide on the final distribution of their assets.
When estate documents are filed with probate courts the individual’s financial details become public record. This is an unfortunate twist for many people who would rather keep their affairs private. Intestate proceedings are typically long, drawn out, and costly.
As estate lawyer Amanda DiChello was recently quoted in the NY Times, “It’s easier not to address it (drafting a will), and it’s always the worst result. Then it costs oodles and oodles of money to handle the mess after the fact.”Creating a revocable trust is the best method to avoid probate and the public eye, but here are a few easy and less costly methods to consider:
- Simple Will: This provides instructions as to how you want your estate distributed and who oversees the distribution (also known as the Executor).
- Name a Guardian: If you have minor children it is critical that you spell out who you want to take care of them in the event of your death.
- Health Care Directive: Often part of the process when writing a will, the health care directive spells out your wishes if you are seriously injured and cannot make decisions yourself.
- Life Insurance: Families certainly, but even single individuals, should consider their life insurance needs to cover funeral expenses, outstanding debts, and replacement income for those left behind.
- Beneficiary Designations: One easy and no-cost way to transfer assets in death is by beneficiary designations. Check your retirement plan accounts, IRAs, HSAs and bank accounts to see who is named in the event of your death. Even individual accounts can be amended to add a transfer of death (TOD) designation.
- Social Media: A list of your accounts and passwords should be left for those who need to step in for you in the event of your death.