By Team Tomorrow
Published June 24, 2019
Legal terminology can make managing your finances and figuring out your estate plan downright intimidating. That said, a little knowledge goes a long way. With that in mind, we’d like to help you understand one really important piece of legal terminology — intestate. We’ll go through what it is, how it works, and why it matters in your own financial life.
Intestate is the state of dying without having a legal will in place.
When a person dies, someone needs to answer where the belongings should go — who should inherit them. Unfortunately, without a will in place, your desires here might not be honored.
Any of the things you own that are not “assigned” by a will, trust, or other means is considered intestancy.
When you die, it’s necessary for someone to identify your assets, pay off your debts, and allocate the remaining assets to your inheritors.
If you are testate (having made a valid will or trust before you die), the person in charge of that process is your executor – an individual you choose ahead of time. This person will distribute your possessions based on your will and any other asset declarations, such as:
If you don’t have an explicit declaration of where those assets go (a will, a trust, or another legal instrument), those remaining assets are distributed by a state-appointed executor, according to state intestacy laws. You have died intestate.
Note, it is possible to have some of your assets to be intestate, while others are spoken for. If your will is incomplete, portions of your estate may still end up intestate upon your passing.
When you are intestate, the method by which your assets are distributed is decided by state probate laws. These laws can vary widely from state to state and may not represent your wishes. Furthermore, the probate process pays off your liabilities and distributes your assets. This process may be governed by laws from different states depending on where you held residency, where your property/assets were located, and other factors. In this case, it’s even possible for the state laws to conflict!
The state-appointed executor is responsible for identifying your potential heirs, following the state laws on distribution and representing your desires and interests. But there are no guarantees that this process will go smoothly or according to your wishes.
Potential heirs can contest probate decisions in court, arguing about your wishes and stretching out the legal process.
Ultimately, intestate matters because it means your desires might not be represented.
Only you know your wishes about your estate once you pass. If those aren’t documented in a legal will or trust, those wishes are subject to the imperfections in the probate process. These include the potential that:
In the worst case, your estate would be diminished, delayed, and potentially even going to the wrong people.
Intestate is a very serious situation, so it’s worth exploring how to prevent your own estate from entering intestacy.
The good news is that intestate is fairly easy to avoid. Here are three ways to prevent your estate from being in intestacy when you die:
When you pass away, having a will or trust can help prevent your family from needing to go through protracted legal processes to determine what happens with your money and possessions.
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