Sometimes our procrastination gets the best of us. So many clients have said “we’ve been meaning to get our estate documents set up for YEARS.” For those of you that have made it to my office, cheers to you for checking that “to do” off your list. For those of you that still have it on your list, let’s talk about what happens if nothing is done before you pass away.
When someone passes away without a Will, they are considered to have died intestate. The Minnesota legislature has created a statute that describes how your property will be divided up among your spouse, children and/or other family members. These are the rules of intestacy.
Sometimes the end result is that the property gets to the people you intended and in the amounts you intended. For example, in a simple traditional family setting, surviving spouse and children that are biological to both the deceased and the surviving spouse will be heirs. The surviving spouse will likely receive all the assets, which was probably the intention of the couple.
Our family structures these days tend to be a little more complex. Second marriages, unmarried couples, children from prior relationships, step-relations. The list goes on and the basic rule of “all to surviving spouse” may not be the deceased’s intended distribution plan. Why not take some basic steps to ensure your estate is distributed to your loved one’s that you designate.
Here is an example of the complexity that can be added by not doing anything. Bob and Sue were married in 2005. Bob had a child from a prior marriage that ended in divorce in 2000. Bob and Sue did not complete any estate plan documents, it was on the “to do list.” Bob died unexpectedly in 2015. Sue came in and we started a probate for multiple financial accounts that Bob had in his name only with no beneficiaries designated, these accounts were valued at about $500,000. Bob and Sue did have some assets that were titled jointly and those passed automatically to Sue. Based on the Minnesota intestacy rules, Sue was able to keep a portion of Bob’s retirement accounts (up to $225,000) and then the remaining amount, $275,000, had to be split with Bob’s daughter 50/50. Was this what Bob had really intended? Did he want Sue to have the entire $500,000 in the financial accounts? Did he want his daughter to have the $137,500 sharing 50/50 on amounts over $225,000? We’ll never know. There are other factors that play into this example, but it at least gives you a picture of what could happen.
I would encourage you to work with a professional, get those basic estate plan tool box documents in place. Avoid any uncertainty and added expense by having to settle your intestate estate.
Please send me an email at email@example.com with any topic suggestions or requests you may have. Although we cannot give you legal advice through the column, we can provide some general information that may be helpful for you to know. Our purpose is to educate and we hope that you can take something new away from this column each time you read it.