What happens if a loved one dies without a will? Millions of us will no doubt find out, as two-thirds of American adults don’t have wills, according to a recent survey by Caring.com.
If a person dies without a will or will, the probate court decides who gets the property of the deceased, said certified financial planner Vid Ponnapalli, founder of Unique Financial Advisors LLC in Holmdel, New Jersey.
“But while the court divides 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 process under the laws of the state where the deceased lived.
“Generally speaking, as a first step, this process involves identifying the kinship, also known as the bloodline, of the deceased,” Ponnapalli said. “This process can take a long time and puts the burden on children to prove to the court that they are your offspring.”
There is great uncertainty about what the courts will decide if there is no 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. “In the courts, equal is equal” [numerically].
“You don’t know how they will divide your wealth,” Schwartz added.
He mentioned other consequences 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 Problems: “In this age of ubiquitous opioid problems, an heir could blow through a legacy,” Schwartz said. “How do you make sure they are taken care of without a will?”
- Long distances: Can family members travel to court? Or should they hire a lawyer and/or a financial advisor from that area or state?
- To find the information of the deceased: The family must find proof of residency from the deceased and understand what account statements are there, who the accounts belong to and how they are held – individual name, company, joint, retirement, real estate, partnership, etc.
- Several state laws: For example, not all states recognize domestic partnerships or common law spouses.
Child custody uncertainty is another ramification of gut dying, 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.
Last but not least are the emotional consequences that affect the family of the deceased if there is no will, Dutram said.
“Your loved ones will already be in a state of trauma — the last thing you would want is a complicated process for them to manage your estate,” he said. “The family will have to decide… what? [the deceased] would have liked it.”
“And friends and acquaintances can come out of the woodwork for handing out the deceased’s belongings, such as vehicles,” Dutram added.
What to do if a loved one dies?
- Secure the property: If necessary, restrict access, change the locks, make videos of everything and forward the mail.
- Please contact the funeral home: Ideally, have a family representative for that. Take care of death certificates, but don’t let them fall into the wrong hands. Death certificates can give a lot of access to personal documents and/or possessions.
- Search for legal documents at home: Search for real estate deeds, insurance policies (is there an asset attached?), bank statements, retirement accounts, tax returns (to see income and assets). Also look for the names of a financial advisor, accountant, attorney, or other professionals who know about the deceased. The more you know, the better.
- Call the county court and ask about the Surrogate Court: They will explain the process and the forms to be filled in. They usually require an original death certificate.
Often a person can handle the process on their own, 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 estate attorney.
— Sabine Franco, Managing Director at The Ambitious Legacy Firm in Hempstead, New York