Distribution of Your Property When You Don’t Have a Will or Trust
If you die without a will or trust, there’s bad news and there’s good news. The bad news is that you won’t be able to direct how your property is distributed. The good news is that every state has laws, known as intestacy laws, which govern the transfer of property in the absence of a will or trust. The laws vary from state to state, typically leaving all or most of your property to a surviving spouse, and/or to your children.
Assets Not Covered by the Laws of Intestacy
The intestacy laws generally govern only those types of property that would have passed through a will, had one been in place. Certain types of property pass separately, even if a valid will has been executed:
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- Property held jointly—If you have a bank account, investments or other property titled jointly with another person, the property passes automatically to that person upon your death
- Property held in a living trust—If the property was already held in trust at the time of your death, you no longer owned it—the trust did. Because the trust is still valid, the property remains in the trust, subject to its terms.
- Life insurance proceeds—Typically, a life insurance policy specifies a beneficiary. The only time that life insurance proceeds would be governed by laws of intestacy is when the proceeds are payable to your estate in the event of your death.
- Retirement funds with a named beneficiary—These pass similar to insurance death benefits.
Distribution of Property under State Intestacy Laws
As a general rule, state intestacy laws grant beneficiary rights to spouses, registered domestic partners and blood relatives only. If the decedent was married, the surviving spouse gets a large percentage of the assets. If there are no children, the surviving spouse typically takes all of the estate. However, there are provisions in all states that prohibit people from receiving assets if they treated the deceased poorly. In addition, state laws provide specific guidance regarding the impact of pending separation or divorce, common law marriage and same-sex marriage, as well as biological or adoptive parents.
Siblings and parents have very limited rights under most intestacy laws, with the opportunity to receive assets only when there is no surviving spouse, and no surviving children. Each state also has its own rules regarding what happens when a specific heir is deceased.
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