Death is an inevitable part of life, yet many people avoid planning for it. While thinking about your mortality is uncomfortable, failing to prepare an estate plan can have long-lasting repercussions for your loved ones. What happens if you die without an estate plan (also known as dying “intestate”)?
State law will determine what happens to your assets.
When someone dies without an estate plan, state law defines who receives their assets. This generally prioritizes spouses and children, though your assets might go to other blood relatives like parents or siblings if you are not married and have no children. This one-size-fits-all approach might not align with your personal wishes and could lead to unintended people receiving your possessions.
Intestate succession laws may leave out unmarried partners.
For unmarried couples, the lack of an estate plan can be particularly distressing. Intestacy laws do not recognize unmarried partners. As a result, unmarried partners typically receive nothing without an estate plan.
The court will determine who cares for your child.
If you have minor children, an estate plan allows you to designate their guardian in the event of your death. Without such a designation, the court will decide who will take care of your children. This can result in lengthy custody battles or your children ending up with a guardian who might not be your first choice.
Your family may face financial uncertainty.
Without an estate plan, your assets are frozen until the probate court decides how to distribute them. As a result, your loved ones may be unable to access the money you want them to receive until the estate is closed, which can take months or even years.
Dying intestate means you cannot prepare for taxes on your estate.
Effective estate planning can help in reducing estate taxes and other related expenses. By not having a plan, you may miss the opportunity to take advantage of tax strategies. As a result, a larger portion of your assets could go to taxes rather than to your loved ones.
Having no estate plan means you have no control over your legacy.
An estate plan allows you to make charitable contributions, fund educational trusts or pass on family heirlooms according to your wishes. Without those provisions, the state and the court define your legacy.
Dying without a plan in place can be challenging for your loved ones. This makes creating an estate plan an important step for people at many stages of life, allowing them to protect their loved ones and their legacy.