'Your loved ones will already be in a state of trauma.' The ramifications of dying without a will
- Two-thirds of U.S. adults have no will, and their dying intestate has serious implications for grieving family members and other potential heirs looking to settle the deceased's affairs.
- There is great uncertainty around what courts will decide in the absence of a will, said Andrew Schwartz, senior vice president of Madison Planning Group in White Plains, New York.
- Differing state laws, differing goals among potential heirs, family addiction issues and child guardianship problems are just some of the complicating factors when people die with no will.
What happens if a loved one dies without a will? Millions of us are bound to find out, as two-thirds of American adults have no will, according to a recent Caring.com study.
If a person dies without a will, or intestate, the probate court decides who gets the deceased's property, said certified financial planner Vid Ponnapalli, founder of Unique Financial Advisors LLC in Holmdel, New Jersey.
"But while the court distributes the property, it is ultimately up to the survivors to claim their rights to it," he said.
For an intestate situation, the probate court appoints an executor for the estate who will follow a process according to the laws of the state where the deceased lived.
"Generally speaking, this process, as a first step, involves identifying the kinship, aka bloodline, of the deceased," Ponnapalli said. "This process can take a lot of time and puts the burden on children to prove to the court that they are your offspring."
There is great uncertainty around what the courts will decide in the absence of a will, said Andrew Schwartz, senior vice president of Madison Planning Group in White Plains, New York.
"Equal and fair are two different things," he said. "To the courts, equal is equal [numerically].
"You don't know how they will divide your assets," Schwartz added.
He listed other ramifications of not having a will:
- Different heirs, different objectives: For example, if a child or grandchild had special needs, the inheritance may disqualify their special needs fund.
- Addiction issues: "In this time of pervasive opioid issues, an heir could blow through an inheritance," Schwartz said. "Without a will, how do you make sure they're taken care of?"
- Long distances: Can family members travel to the court? Or do they need to hire an attorney and/or a financial advisor from that area or state?
- Locating the deceased's records: The family needs to find the deceased's proof of residency and understand what account statements exist, who the accounts belong to and how they are held —individual name, business, joint, retirement, real estate, partnership, etc.
- Differing state laws: For example, not all states recognize domestic partnerships or common-law spouses.
The uncertainty of child custody is another ramification of dying intestate, said Mark Dutram, CFP and president of Bayview Private Wealth in Destin, Florida. For example, if the deceased had custody of minor children, it would be up to the court to choose a guardian to care for them and a conservator to oversee their assets, he said.
Not least of all are the emotional ramifications that afflict the deceased's family when there is no will, Dutram said.
"Your loved ones will already be in a state of trauma — the last thing you'd want is a complicated process for them to administer your estate," he said. "The family will need to determine ... what [the deceased] would have liked."
"And friends and acquaintances may come out of the woodwork for handouts of the deceased's effects, like vehicles," Dutram added.
What to do if a loved one dies intestate
- Secure the home: Restrict access if necessary, change the locks, take videos of everything and forward the mail.
- Contact the funeral home: Ideally, let there be a family representative for this. Get death certificates, but don't let them get into the wrong hands. Death certificates can provide a lot of access to personal documents and/or assets.
- In the home, look for legal documents: Seek out real estate deeds, insurance policies (is there an asset attached?), bank statements, retirement accounts, tax returns (to see income and assets). Also look for names of a financial advisor, accountant, lawyer, or other professionals who would know about the deceased. The more you know, the better.
- Call the county court and ask for the Surrogate Court: They will explain the process and the forms to fill out. They usually require an original death certificate.
Often an individual can handle the process alone, but if there are conflicts within the family, large numbers of assets or certain types of assets (such as a business or intellectual property), you should engage a trust and estates attorney.
— Sabine Franco, managing attorney at The Ambitious Legacy Firm in Hempstead, New York