WHO WILL INHERIT YOUR ASSETS?

     Do you know for sure who will inherit your assets? If you have made adequate plans, you probably know what will happen to your real estate, belongings and investments when you die. However, many people have not planned for the passing on of their assets for a variety of reasons. Often they put if off because they do not want to think about death. Or, they believe do not have enough assets to worry about making plans to pass them to those they choose. Regardless of the quantity of assets, these assets constitute your estate. Let’s look at what may happen if you fail to do any estate planning.

     With or without a written will, to pass your estate to your heirs, a court proceeding known as probate is generally required. Probate is the legal process for the payment of debts and distribution of your property. A written will directs the court specifically how you wish your assets to be distributed upon your death and who you want to handle that distribution. Without a written will, the court, not you, will decide how your estate will be distributed by following the state law where you lived at your death. In a sense, the court provides the state’s will for you. Let’s look at what can happen.

     George and Patricia, residents of Florida, were married with two adult children, Ava and Karen. They owned everything jointly and had no wills. George died of a stroke. Automatically by state law, all of their assets were passed to Patricia, the surviving joint owner. Ava and Karen will not be entitled to any share of the assets until Patricia dies, at which time the entire estate will pass to them. Meanwhile, however, Patricia married Richard who outlived her. Because Patricia failed to prepare a written will prior to her death, all of her assets that she and George intended to pass to Ava and Karen were required to be split with Richard, Patricia’s surviving spouse. By Florida law, Ava and Karen received only half of their parents’ assets while Richard received the other half.

     Next, consider the case of Wayne and Gracie who live in Florida, have one child, Ernie, and no written wills. Each of them owned certain assets individually. Gracie died in a automobile accident. Because Gracie had no written will, all of her individually owned assets did not pass directly to Wayne as she imagined they would. Under Florida law, instead of receiving all of Gracie’s assets and they envisioned, Wayne received first $60,000 plus one-half of any remaining balance. The rest was given directly to their son, Ernie.

     Now consider the situation of Jillian and Neil who were married without children but each had siblings, nieces and nephews who they wished to receive their assets once they had both passed away. They had no written wills and owned everything jointly so when Neil died the entire estate passed to Jillian. Jillian later married Howard who had 3 children from a prior marriage. Howard outlived Jillian who still failed to prepare a written will. Since Jillian had no children or grandchildren, her entire estate passed to Howard. Any wishes that Jillian and her first husband, Neil, had to pass their assets to their siblings, nieces and nephews died with Jillian. Subsequently, when Howard died, the entire estate, including Jillian’s assets, passed to Howard’s 3 children. Jillian and Neil’s heirs received nothing.

     Because the couples above failed to prepare even simple wills and allowed the state law to dictate how their estates would be distributed at their deaths, their heirs received a lesser amount, or none at all, or their assets were distributed to non-family members. Had each of the couples above at least prepared written wills, or better yet, a living trust to also avoid probate, their desires would have be satisfied and their beneficiaries would have received the assets they were intended to receive.

     Unless you intend for your state law to decide how to distribute your estate upon your death, you should consider having a written plan, either through a will or living trust, so that you, not the court, can control how and to whom your assets will ultimately be distributed.

 

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