All fifty states in the United States and the District of Columbia have a so-called “intestacy statute” that dictates where a decedent’s probate assets will pass if the decedent does not have a will. Many famous individuals, including Abraham Lincoln, Prince, Michael Jackson and Howard Hughes all died without a valid will. This has led to unintended consequences for their respective estates including years of litigation to determine the rightful heirs.
Assets that will pass pursuant to the terms of a will are “probate” assets. Probate assets include the following types of assets:
- Real property interests titled in your sole name or property you own as tenants-in-common with other owners; - Personal property, such as jewelry, automobiles and family heirlooms; - Bank accounts titled in your sole name; and - Financial assets, such as life insurance proceeds and retirement accounts, that are payable to you or your estate.
New York’s intestacy statute is a typical example of how probate assets pass when a decedent does not have a will. If a New York domiciliary decedent is married and has children, her surviving spouse will take the first $50,000 in probate assets and the surviving spouse and children would divide the remaining probate assets equally. If she is not married, the probate assets would pass to the decedent’s relatives as follows:
1) First, to the decedent’s descendants (children, grandchildren, etc.);
2) If none, to the decedent’s parents;
3) If none, to the decedent’s siblings;
4) If none, to the decedent’s grandparents; and
5) If none, to the descendants of the decedent’s grandparents.
New York will continue the search for intestate heirs only as far as the great-grandchildren of the decedent’s grandparents, i.e., the decedent’s first cousins and first cousins once removed. Any heir more distant than this, such as a great uncle or second cousin, would not receive the decedent’s probate assets. Instead, the probate assets will “escheat” to the state of New York, which is often the last result a decedent would want. It is the rare scenario where you would want the state of New York rather than relatives (however distant), friends or charities to receive your probate assets.
Therefore, in order to avoid the often undesirable result of your state of domicile writing your will, you can take several concrete steps to avoid application of an intestacy statute:
1) Have a Will drafted for you. In all cases, a validly executed Last Will and Testament will trump the provisions of any intestacy statute.
2) Make sure assets are titled properly. You can change the nature of assets from probate to non-probate (and therefore have such assets pass separate and apart from your will) by titling them differently. For example, a bank account can be titled jointly during your lifetime and avoid probate at the death of the first joint owner.
3) Make sure your beneficiary designations are in effect and confirm with your overall estate plan. Assets such as IRAs, 401(k)s and life insurance can generally be paid to any beneficiary that you want without going through probate. You should regularly check to make sure your beneficiary designations are consistent with your wishes. As a general rule, these assets should not be paid to you or your estate.