It is probably safe to say that most people do not like considering their own mortality. That likely helps explain why the majority of Americans do not have a will, according to a survey from Caring.com. Millennials and Generation X are the demographics most likely not to have a will, with 78 percent of Millennials and 64 percent of Generation X failing to have this basic estate planning document in place1.
There are two additional critical estate planning documents that everyone should have, including a living will (also known as a health care directive or advance directive) and a power of attorney. Collectively, these documents comprise the typical "estate plan" for most people. An estate planning attorney will discuss each of these documents with you when consulted to prepare an estate plan. You can seek out an estate planning attorney on your own, or as part of preparing a comprehensive financial plan a financial planner will review your estate planning needs and help identify any gaps in your plan. The financial planning process helps highlight the importance of estate planning and can subsequently make the estate planning discussion with an attorney easier.
Regardless of the approach taken, creating a will should be the first step in a comprehensive estate planning process as it gives you the opportunity to make sure your wishes are carried out after you're gone. Typically the cost of preparing a basic will is a few hundred dollars. For many people it only takes a day or two to draw up the will and protect their beneficiaries. In contrast, if you don't have a will, the state will typically decide how to distribute your property. Laws vary greatly from state to state and based on your marital and familial status. Before you put off creating a will any longer, consider the consequences of these six common scenarios of not having a will in place.
Consequences for Those Married With Children
If a married person dies without leaving a will, their investments, property, and accounts that are “jointly owned” go to the co-owner (usually a spouse or child) without going to probate court. However, separately owned property and accounts typically are distributed by the state, which may award one-third to one-half of the assets to a surviving spouse, with the remainder split among the children.
Consequences for Those Married With No Kids or Grandkids
If a married person with no children dies without a will, some states will give the entire estate to the surviving widow or widower. Other states give one-third to one-half of the deceased's estate to the spouse with the rest going to the deceased's parents or siblings. The jointly owned property, financial accounts, investments, and community property goes to the surviving co-owner.
Consequences for Those Single With Children
If someone is unmarried with children when they pass, all state laws give the deceased's assets to surviving children in equal shares. If a child of the decedent is deceased and he or she has living children, their share is split among those children (the decedent’s grandchildren).
Consequences for Those Single With No Kids or Grandkids
For unmarried people with no children, most states will typically favor the person’s parents if they are still alive. If not, many states will divide the property among the decedent's siblings (or nephews and nieces if the siblings are no longer alive). If there are no living relatives, the state will typically receive the estate.
Consequences for Unmarried Couples
If you are not married to your partner, dying without a will can devastate your partner financially because intestacy laws only recognize spouses and relatives. Unmarried couples don't inherit their partner's property if one of them dies with no will. Instead, the decedent's property is distributed among relatives and the partner isn't legally entitled to anything.
Consequences for Domestic Partners
Special rules may apply to your domestic partnership. Not all states honor domestic partnerships, so you should check the laws that apply to you and determine how your property would be distributed if you die intestate. Generally, domestic partners may have the same rights as a surviving spouse, but it depends on how the property is owned.
Take the Next Step
Even if the laws in your state align with your wishes in terms of the dispersal of your estate, having a will in place is still a good idea. The probate process with a will in place is typically faster and easier than with no will. With a will you also name your own executor, who is responsible for distributing your estate as outlined in your will, instead of the state appointing an administrator to manage the task. The bottom line is that without a will you are leaving the distribution of your assets and the guardianship of your children, if you have them, up to the state.
Just as importantly, having an updated and properly executed will also makes your wishes expressly known and can make the stressful process for surviving family members a little easier. While it may not be the most enjoyable task you will undertake, once it is complete you can enjoy the peace of mind that comes with knowing you have done everything in your power to protect those you love the most. Seeking the advice of a financial planner is a great way to get the process started and allows you to see how an estate plan will integrate with your comprehensive financial plan.
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This content is developed from sources believed to be providing accurate information. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.