February 16, 2015
Authored by: Anna Lantelme and Kim Civins
It’s true. Even if you don’t have a will, your state has written one for you, and it serves as the default plan for individuals who die without a will (aka “intestate”). Your local Probate Code will have all the juicy details. For the most part, intestacy statutes try to mimic what the average person would have done with their assets if they had a will. For instance, if you’re single and without children, it generally reverts to your parents. If you’re married with minor children, it would generally go to the spouse with whom you had the children, and in some states (like Georgia), a spouse shares with the children. The people who receive your assets under such a statute are generally referred to as your “heirs at law”.
While it may have been thoughtful of your state to provide this option, let’s face it – more often than not, even the most functional of families would prefer you leave a will. For many individuals, the provisions of their state’s intestacy statute are not aligned with their desires at all. For many young, unmarried individuals, they may have siblings they’d prefer to benefit instead of their parents. For married couples without children, some states provide that the surviving spouse only receives a certain amount of the estate, and the remainder reverts back to their parents (e.g. Colorado). Some clients don’t get along with their families and would prefer to give their estates to a charity or a good friend.
Consider the case of Bobbi Kristina Brown, the daughter of the late Whitney Houston and Bobby Brown. Despite the divorce between Whitney and Bobby, according to Georgia’s intestacy statute, if Bobbi Kristina was found to not be married, Bobby, as her father, would be Bobbi Kristina’s natural heir at law, and would stand to inherit the portion of Bobbi Kristina’s estate which would pass through probate court supervision. (Side note: only assets passing through probate are subject to distribution to “heirs at law” according to a state’s intestacy statute. Assets held within a trust will pass according to the provisions of a trust). Of course, all this assumes that Bobbi Kristina didn’t have a will.
Reporters are in a frenzy over the possibility that Bobby Brown could inherit the proceeds of Whitney Houston’s estate. We know that the bulk of Whitney’s estate is in trust for Bobbi Kristina until she turns 30, and otherwise never intended to be inherited by Bobby Brown. However, any assets Bobbi Kristina received outright from Whitney’s estate or its trusts would be subject to the intestacy rules (again, assuming she had no will), as well as estate tax a second time around.
Thankfully, Whitney Houston utilized attorney assistance to establish various trusts to govern the distribution of her estate. However, it is important to note that mandatory distributions from a trust do nothing to prevent potentially millions of dollars’ worth of estate tax for future generations. The reality is that we see far too many clients who do not consider this or put off their planning endeavor until it’s too late, and we have the unfortunate displeasure of informing a grieving family that the largest beneficiary will actually be the IRS.
Sometimes, you might not actually need a will, and sometimes what you actually need is a trust. Each client is different, and only an attorney will be able to truly advise you what is best for your situation.