Many people wrongly believe that if they die without a Will, then the state gets to keep their estate assets. Although that is not true, without a Will the state does decide who gets your estate assets.
There are a series of laws in Pennsylvania which determine the order of intestate succession (“intestate” simply means “dying without a Will”). There are special rules for how much a spouse inherits if there is no Will, which is dependent on whether or not there are children, and if they are children of the surviving spouse. (It should be noted that a spouse can also elect a portion of his or her deceased spouse’s estate even if the deceased person disinherited the spouse, but those rules are unique to spouses, and do not apply to other beneficiaries.)
However, children have no automatic right in the law to inherit from their parent; thus, although one cannot totally disinherit a spouse, one can disinherit a child or grandchild if circumstances warrant it, but only if one has a Will which does so.
In the event that one dies without a Will, the state’s rulebook for who inherits after a surviving spouse is, in this order: Issue (children, grandchildren, etc.) of the decedent; then the decedent’s parents; then the decedent’s siblings or their issue (nieces, nephews, great-nieces, great-nephews, etc.); the decedent’s grandparents; then the decedent’s uncles, aunts, and their children and grandchildren; and, finally, and only if none of those relatives can be found, the assets go to the state. The law also outlines somewhat complex rules on how the estate is divided within each of those groups, and circumstances in which certain of those parties can be excluded by law from inheriting.
How do you avoid your estate assets being distributed to people whom you may not want to receive them? Simple – have a Will; that way you control who gets your “stuff”. The law states that the intestate rules only apply if the deceased person had no Will, or if an asset was not disposed of by the Will.
If one has a Will, then his or her assets go to those named in the Will.
It is important to note that these rules only apply to assets which pass through a person’s estate, which are known as “probate assets”. As a generalization, probate assets are assets which the deceased owned in whole or in part in his or her own name. They do not include assets for which one is a joint owner with another, or for which one has designated a beneficiary, such as life insurance, certain types of investment assets, IRAs, 401(k)s, and other qualified retirement plans.
Those all pass to the named beneficiaries; because they are not probate assets, they are not subject to intestate succession.
What is the lesson to be learned? Make a Will, and keep it current, and make sure you have named beneficiaries where appropriate!
Once you have a Will in place, or have named beneficiaries, review those periodically to assure that they reflect your current wishes. That way, you are always sure that, when your time comes to pass on, your hard-earned assets will only go to those whom you want to receive them.
If you want to learn more about estate planning and wills in general, consider joining us at one of our upcoming workshops. You can find out more by clicking here.