The thought of passing away is never pleasant, but it’s important to plan for the inevitable to help ensure that your loved ones are taken care of and your wishes are carried out. For many people, creating a will is one of the most important aspects of this planning process.
Dying without a will, known as dying “intestate,” can have serious consequences for your estate and family. In this blog, we explore the implications of dying intestate and provide tips on keeping a new estate plan current.
What Happens to Your Estate If You Die Without a Will?
State laws will determine the distribution of your assets: When you die without a will, state intestacy laws will dictate how your assets are distributed. These laws may not align with your wishes and could lead to disputes among family members and beneficiaries.
The probate process can become more complicated: Probate is the legal process through which an estate is settled and assets are distributed. Without a will, the probate process can be more time-consuming and expensive. The court will appoint an administrator to manage your estate, which could be someone you would not have chosen.
Minor children may not have the guardian you would have preferred: If you have minor children and die without a will, the court will appoint a guardian for them. This person may not be the individual you would have wanted to raise your children, potentially leading to emotional turmoil for your family.
Your unmarried partner may not inherit: Unmarried partners are not automatically recognized as heirs under state intestacy laws. Without a will specifying your intentions, your unmarried partner may not inherit any portion of your estate, even if you intended for them to do so.
There’s a potential for increased taxes: A well-crafted estate plan can help minimize estate taxes. Dying intestate means you have not taken advantage of available tax-saving strategies, which could result in a higher tax burden for your heirs.
Tips for Keeping Your Estate Plan Up to Date
Once you set an estate plan that includes a will or trust, you want to make sure it stays updated. Here are tips to help ensure your estate plan continues to reflect your wishes:
Review your estate plan regularly: Life changes, such as the birth of a child, marriage, divorce, or a change in financial circumstances, warrant a review of your estate plan. It’s a good idea to review your estate plan at least every three to five years, or as significant events occur.
Update your beneficiaries: Keep your beneficiary designations up to date on your retirement accounts, life insurance policies, and other assets with designated beneficiaries. These designations supersede any instructions in your will, so keeping them current is crucial.
Keep your will accessible and inform your executor: Store your will in a safe and accessible place, and let your executor know its location. Doing so will make it easier for them to carry out your wishes when the time comes.
Consider a revocable living trust: A revocable living trust allows you to manage your assets during your lifetime and distribute them upon your death without going through probate. This can save time and money for your heirs and help maintain privacy.
Coordinate with your financial advisor: If you have a complicated financial situation or the total value of your estate exceeds the estate tax exemption limit (currently $12.93 million), it can be a good idea to seek guidance from a fiduciary financial advisor. Your financial advisor can help you assess the potential implications of your estate plan and suggest strategies to minimize taxes. They can also collaborate with your estate planning attorney.
Final Thoughts
Dying without a will or trust can seriously affect your estate and loved ones. To avoid these issues, it’s crucial to create a comprehensive estate plan and keep it up to date. If you have a complicated financial situation or a large estate, consider enlisting the guidance of a fiduciary financial advisor who can collaborate with your estate planning attorney to help ensure your plan is tailored to your needs.
By taking these steps, you may have more peace of mind, knowing that your assets will be distributed according to your wishes and your family will be protected.
Schedule a complimentary consultation with one of our fee-only financial planners to discuss your personal situation.
This material was generated using artificial intelligence (ChatGPT) and edited by Kaleido Inc. from information derived from sources believed to be accurate. This information should not be construed as investment, tax, or legal advice.