Yes, in that the state furnishes everyone with a plan to settle their affairs and distribute their assets when they die. That plan is called the laws of intestacy. However, that is a far cry from having your own plan to provide for who is to be in charge (the Executor) and who is to receive what. In the narrow sense of having legal documents that state a person’s wishes regarding who they would like to serve as Executor and who they would like to receive their assets after the person has passed away, many have no plan at all. However, in the broader sense of considering whether or not there is a plan for how a person’s assets will be distributed after they die - even if they have not executed a Will - the answer is very much yes.
That is, if somebody dies having executed a Will while they were alive, then that document will be admitted by a Probate Court in the process of settling the decedent’s Estate. The Court will look to that document to determine who the decedent wanted to serve as Executor. After the Court has formally appointed the nominee as Executor, the Executor in turn is charged with following the instructions provided in the Will to gather the decedent’s assets, settle claims against the estate, deal with various administrative tasks, and finally to distribute the remaining assets to the persons named in the Will.
If the decedent dies without a Will, that decedent is said to have died “intestate” and a set of default rules will govern the process of settling that person’s Estate. In the absence of a Will that would have stated whom the decedent would have liked to serve as fiduciary, the Probate Court will simply choose and appoint a suitable person to serve as the “Administrator.” This may be a family member, a friend of the decedent, or even someone who has never met the decedent, such as a lawyer or other professional fiduciary. Once formally appointed by the Court, that Administrator will be obligated to follow the various rules and guidelines that are set by state statute. A court-appointed Administrator will then need to deal with the same tasks as an Executor appointed pursuant to the terms of a Will.
At the end of the settlement of an intestate Estate, the remaining assets will be distributed according to the “intestate laws” of that state. Those rules, which vary from state to state, will mandate the distribution of assets strictly according to the prospective distributees’ relationship to the decedent. While the rules will typically start in priority with distribution to a surviving spouse or children, the rules go on to provide for distributions to more distant relatives if there is no surviving spouse or children, such as to siblings and parents, etc.
Under intestate laws there is no room for any subjective evidence of whether or not the decedent had much of a connection with an intestate beneficiary other than bloodlines. It is possible that sometimes, the intestate laws will lead to an outcome that is close to what the decedent would have liked to have happen. For example, the intestate laws may state that all of the decedent’s assets will pass to the decedent’s surviving spouse and that may be what the decedent would have intended.
On the other hand, in some circumstances the intestate laws may result in an outcome that is very different from what the decedent would presumably have wanted. If the decedent has no surviving spouse or children, the intestate rules may state that the remaining assets are to be split amongst all of the decedent’s siblings. In that case, a long lost brother of the decedent from whom the decedent was estranged for 25 years will have just as much of a right to receive a portion of the decedent’s assets as a brother or sister who cared for the decedent during his or her final days. If the decedent lived with a companion but they were never legally married, then that companion will have no right to receive anything whatsoever under the intestacy laws.
When people are asked if they would like the state to create an estate plan for them, they will almost always answer no. However, if someone keeps perpetually putting off their estate planning until some undetermined future time and they eventually die without ever having gotten around to sign a Will, then the state’s automatic estate plan will be applied, whether the family likes it or not.
Let us help you take control over your own affairs. Call our office at 888-822-8778 to learn more about the planning options available to you.