No one wants to think about death or dying, yet it is inevitable. Ignoring that fact causes many of us to delay planning, which, if the unexpected happens, can result in issues that could have been avoided. That is why everyone should have a will. Without a will, you are leaving what happens to you and your assets up to others.
According to a recent Caring.com survey, 67% of Americans do not have plan in place. If you die without a will — intestate — the probate court gets to decide what happens to your assets. And it can take a long time to get through probate.
We know an 86-year-old woman (Jane) who died suddenly. Her only family was a niece (Susan) who lived out of state. Because she died intestate, her estate had to go through probate so the niece could be named executor. It took eight months. During that time, Susan could not sell Jane’s home. Instead, she had to hire a manager to oversee the maintenance of Jane’s home and pay all of the related costs and fees. By the time she could sell Jane’s house, interest rates went up. Because Susan wanted to sell as quickly as possible, she wound up lowering the price by $40,000 — money she would have had if Jane had a will and Susan did not have to wait for the probate process to play out.
Know the key rules
There are other ramifications for not having a will, such as:
- The probate court follows the state law of the state where the decedent lived when it comes to the distribution of assets. That state is where the probate court will be located. The court will appoint an executor for the estate. The executor, who may not be the person the deceased would have chosen, must follow the process set out in the laws of the state where the deceased lived.
- If the deceased was separated from her/his spouse but died before their divorce was final, the spouse, to whom she or he is still legally married, may inherit the decedent’s assets. Keep in mind that not all states recognize domestic partners or common-law marriage.
- Similarly, the separated spouse may inherit the proceeds from life insurance policies, 401(k) plans and similar assets unless the deceased specifically changed the beneficiary prior to her/his death. In addition, certain employer-sponsored retirement plans designate the employee’s spouse as the beneficiary unless that spouse signs a waiver.
- If the deceased had custody of minor children, it would be up to the court to choose a guardian to care for them. In addition, the court might also appoint a conservator to oversee the children’s assets. And the court will not know what provisions the deceased wished to make for any special needs children.
- Determining what happens to your pet is another issue to consider. Without a will, your pet could end up in a shelter or with people you do not want to care for your pet.
- The future of your digital assets, including online accounts, digital files or property (e.g., photos, videos and domain names) are another concern.
While planning for what will happen after you die may be uncomfortable, it is far better than leaving the decisions mentioned above and others like them to an impersonal court that may not consider your wishes. Consult a tax and estate planning professional who can guide you in planning how to protect your loved ones.
We welcome the opportunity to put our tax expertise to work for you. To learn more about how our firm can help advance your success, don’t hesitate to contact Kathy Corcoran at (302) 254-8240.
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