… It’s Not What You Think And Probably Not What You Want!
If you are married and die without a will do you know where your property will go? Will it go where you want? The answer to both of these questions is likely “no.” Why? The answer lies in a set of default rules created by state legislatures to control the division of your estate if you die intestate (without a will). In North Carolina, these rules are found in the Intestate Succession Act, Chapter 29 of the General Statutes of North Carolina. The problem with these rules is they were written a long time ago and assume many things that are no longer true. For instance, the intestacy rules presume that a “family” is a husband, wife and their natural born children. Today, however, only half of the families in America fit into that definition, meaning half don’t.
According to Wealth Management, one analysis has 50 different types of family structures in American households. Almost 18% of Americans have been remarried, and–through adoption and stepfamilies–millions of children are living in blended families. The laws of intestacy are just not geared to deal with the blended family and more often than not lead to unintended and unwanted results. For example, stepchildren are not considered to be “children” for the purposes of inheritance under the laws of intestacy and though you may view them as your own children, relying on the rules of intestacy will likely disinherit them.
What if you die without a will married without children?
Even in more “traditional” or “standard” family situations, the rules of intestacy provide for quite unexpected and undesirable results. Take, for instance, a young, married couple with no children and both sets of parents living. Now, assume the husband dies in a tragic car accident. Who inherits his assets? Most people assume his wife inherits everything. That is not the case. Depending on how much the husband owned at his death, his wife could end up sharing his estate with his surviving parents. Most young married couples would not want this. Would you?
What if you die without a will married with children?
Take this same young married couple and assume they have one daughter who is a minor and, assume again that the husband dies in a car accident. His surviving wife does not have to share her husband’s estate with his surviving parents. Instead, she must share his estate with her minor daughter. Most young couples with whom I have worked wish to leave their individual estates to the surviving spouse trusting the surviving parent to care for the child’s needs. That is not what happens, though, and it gets worse.
While it may occur to most people that a minor child cannot directly inherit property and must have someone to manage that property until they are 18 years of age, most people are surprised to find that a child’s parent is not presumed to be the natural legal guardian of the child’s estate. What? The surviving parent is presumed to be the legal guardian of their child’s person and will retain custody and responsibility for the child’s welfare. However, if the child inherits money or other property, that same parent must go to court and ask to be appointed guardian of the estate for their minor child. To add insult to injury, the parent will be required to post a bond to insure that the parent does not mismanage or misappropriate the child’s money. Further, the parent has to account annually to the Clerk of Court as to how he or she spent the money and, for certain expenditures, must ask the Clerk’s permission before spending the money.
What if both parents die without a will leaving children?
Assume that both parents die leaving their minor daughter surviving. Who is going to take care of her? If neither parent had a will, the answer is whoever applies, if anyone, and is appointed by the court. Without a will, the parents will have no input whatsoever as to who will take care of their children should they both die. Talking about it is just not enough. Parents need to state their desires as to a guardian for their children in a validly executed will. Absent extenuating circumstances that would tend to disqualify a selected guardian, the court will give deference to the wishes of the parents expressed in a will.
Is this what you want?
If you are like most people, the rules of intestacy do not distribute your hard-earned assets to the people you would choose or in the way you would choose. The best way to protect yourself, your family and your assets is to speak with a qualified estate planning attorney like Stephen P Stewart.
Please call or email me to discuss your needs and how best to address them.
(833) NC-TAX-LAW or (919) 964-5909