What happens if I do not plan my estate?

If you do not plan your estate, you will leave what is legally known as an “intestate estate”, one in which the deceased has left no instructions. The families of those who fail to plan their estates have a rude surprise awaiting for them – the government will fill in the blanks with its own plan. After debts, probate costs, and taxes are paid, the courts will divide the estate according to the laws of intestate succession.

If you do not plan your estate, you may not know who your beneficiaries are. Some states provide that the estate of a married decedent goes entirely to the surviving spouse, provided there are no children from another marriage. Other states provide that the surviving spouse receives only half of the decedent’s estate with the other half going to any children or their decedents. The first example may result in the children being disinherited, especially if the surviving spouse remarries, while the second example may leave the surviving spouse with inadequate resources to maintain an adequate lifestyle.

If you do not plan your estate, and a minor child is entitled to receive an inheritance by law, the court will place the inheritance in a custodial trust. No withdrawals can be made without first obtaining the permission of the court. Whatever is left of your child’s inheritance will be given to your child on his or her eighteenth birthday – with no guidance whatsoever. Since few eighteen year olds have the maturity to properly handle a windfall inheritance, it is likely the inheritance will be totally wasted in a short period of time.

If you do not plan your estate, and you have no spouse or children, most states provide that distributions will be made to your parents. If your parents are in a nursing home or receiving government assistance, who do you think gets the inheritance?

If you do not plan your estate and fail to appoint the personal representative (executor) you want to administer it, the court will fill in the blank by appointing one of its own choice for you according to statutory formula. Children or other heirs may have an equal legal right to be named the estate’s personal representative and may fight over who should be named. This often leads to family feuds and court battles that could have been avoided had the parents simply named their own personal representatives.

If you do not plan your estate, the personal representative may be forced to pay for an expensive bond to insure the estate. This is money that could otherwise have gone to your loved ones.

If you do not plan your estate and you and your spouse both die prematurely, the probate court will appoint the guardian it chooses for your minor children instead of the ones you could have, but failed, to name yourselves. In other words, a stranger to the family will get to decide who tucks in your children at night and takes care of all of their other needs.

If you do not plan your estate, the courts will also maintain continuing jurisdiction over any inheritance left for your children. Court permission is needed to use the inheritance and the court is likely to require an annual accounting of every penny spent. The result is additional accounting and attorney’s fees, paid out of the inheritance, every year until your child becomes eighteen.