In our world of Estate Planning, we often delve into subjects that are somewhat prickly. There’s a popular misconception that “everybody fights about money when someone dies.” (Not actually true.) And after all, the very essence of estate planning is coming to terms with the reality of one’s own mortality – not necessarily a rosy foundation on which to build.
But aside from that somewhat unpleasant aspect of our profession, one of the more amusing aspects is the nomenclature. Today’s topic: Intestacy – sounds like a gruesome disease (probably not as horrible as a topic for another day – per stirpes), but can be almost as bad. The laws of intestacy are the rules that govern the way in which assets are distributed to survivors of a decedent who dies with no will or living trust.
Leaving it up the California Probate Code to dictate the division of your estate is the result of an abject failure to plan. And more often that not, allowing the government to get involved in one’s personal business will result in a sub-optimal outcome.
For example, consider the following outcomes that the Probate Code has in store:
- If a decedent is survived by a spouse, but no living descendants, parents or siblings, the spouse will receive the entire estate.
- If a decedent is survived by a spouse, and a parent or parents, but no descendants, the surviving spouse will inherit all of the decedent’s community property and one-half of the decedent’s separate property. The surviving parent(s) will inherit the other one-half of decedent’s separate property.
- If a decedent is survived by a spouse and a sibling or siblings, but no parent(s) or descendants, the surviving spouse inherits all of the decedent’s community property and one-half of the decedent’s separate property, while the sibling(s) inherit the other one-half of decedent’s separate property.
- If a decedent is survived by a spouse, descendants and parent(s), the surviving spouse inherits one-half of the decedent’s community property and one-half or one-third of decedent’s separate property (depending on whether the deceased spouse left one child or more than one child). The children would then inherit the other one-half (or two-thirds) of the decedent’s separate property and the remaining one-half of decedent’s community property.
- If a decedent is survived by descendants but no spouse, the children will inherit the entire estate.
- If a decedent leaves no surviving spouse, descendants, parents or siblings, the assets will flow to nieces and nephews. If there are none, then it would go to grandparents, aunts, uncles, great aunts or great uncles, cousins, or even the children, parents or siblings of a predeceased spouse (in that order). In the event that there are none of the above, the entire estate will escheat (i.e. be inherited by the State of California)!
So, is your head spinning yet? Clearly the old maxim “Failing to Plan is Planning to Fail” is never more true than in the context of intestacy.
Don’t let this happen to your assets or to your family – taking control of the destiny of the assets you leave behind will not only prevent arbitrary (and often illogical) outcomes such as those detailed above from becoming a reality, but it also is an empowering event that ensures that your wishes will be adhered to. By far the most common reaction that our clients give us after completing their estate plan is peace of mind.