Death is an uncomfortable topic for many, which often results in a lack of essential estate planning. But what are the ramifications if you die intestate or without a will or trust? Let’s explore the potential consequences and the importance of having a solid estate plan.
The State Takes Control Over Asset Distribution
If you die without a will or trust, state intestacy laws dictate how your assets are distributed. This distribution may not reflect your desires, potentially causing your estate to be divided in unintended ways.
For example, in Arizona, your spouse and children that you have with someone other than your spouse share your assets under intestate succession laws.
Lengthy and Costly Probate Process
The probate court would preside over the administration of your estate if you die intestate. This court could also supervise if you have a will, but there would be instructions to follow. Things are very different when there is no will.
Probate can be time-consuming and expensive, potentially depleting a significant portion of your estate through attorney fees and court costs. Plus, the probate process is public, diminishing your family’s privacy.
Court-Determined Guardians for Your Children
If you have minor children, a will is crucial as it allows you to nominate a guardian for your children if you pass away. Without a will, the court chooses who will care for your children, and their decision may not align with your preferences.
Potential Family Conflicts
When you die intestate, you leave room for disagreements among your surviving relatives about asset distribution. Emotions can escalate, and minor disagreements can turn into drawn-out family disputes. A clear will or trust can help prevent these conflicts, preserving family harmony.
Unmet Wishes and Legacy
Without a will or trust, your personal wishes and legacy may not be realized. From significant donations to a cherished charity, a precious heirloom passed to a friend, or care provisions for your pet, these personal wishes may go unfulfilled if you die intestate.
Higher Estate Taxes
A well-structured estate plan, including wills and trusts, can help reduce estate taxes, maximizing the assets left for your beneficiaries. Dying intestate could expose your estate to unnecessary taxes, reducing the wealth you leave for your loved ones.
As a case in point, consider the Roman Blue intestacy case. Blum was a wealthy Holocaust survivor from New York City who passed away in 2012. He was known for his successful real estate business and had amassed a significant fortune throughout his life.
He died without leaving a valid will or any known heirs. His lack of a will created a complicated legal situation.
In Blum’s case, his estate, which was estimated to be worth around $40 million, became the subject of an extensive search for potential heirs. Despite the efforts of various legal experts, genealogists, and investigators, no legitimate heirs were found.
The search included reaching out to distant relatives, reviewing historical records, and even publishing advertisements seeking potential claimants.
In the end, the entirety of his estate was subject to federal and New York state estate taxes, and there were no steps taken to ease the burden. On top of that, no living relatives have been found, so the estate was absorbed by the state under escheat laws.
As you can see, the consequences can be disastrous if you go through life without a plan. Action is required if you are in this category, and you can schedule a consultation at our Phoenix, AZ estate planning office if you call us at 888-222-1328. There is also a contact form on this site you can use to send us a message.
- Beyond Probate: Understanding the Drawbacks & Alternatives - September 1, 2023
- DIY Estate Planning: Worth the Risk? - August 31, 2023
- Use These Questions to Develop an Estate Plan Outline - August 30, 2023