Hello, my name is Chad Taylor, Managing Partner with MDT Financial Advisors in Houston, Texas.  There is a name for the ultimate act of procrastination—“intestacy.” That is the legal term given to those who fail to plan for their passing and die without a will. This basic step in estate planning is overlooked by more than half of American adults—who die without wills.

Without direction from the decedent, the state has no choice but to impose its rules and control upon the remnants of a person’s legacy. This results in added grief for the survivors, long delays in settling the estate, much higher legal bills, added taxation, and chaos for minor children.

Without a will, state laws will determine disposition of property. These rules vary from state to state. Generally, spouses get half of everything not jointly owned, with the rest split evenly among surviving children. Unmarried partners are out of luck … laws do not provide for friends.

In cases where no heirs can be located, the State will often assume control of the assets. The decedent can forget about leaving anything to charities or friends. Genealogical tracing services often search state records for unclaimed estates to match with heirs they locate. They extract a negotiable fee for this service.

For larger estates, that distribution process can result in unnecessary estate taxes being paid on assets transferred to children. Much of the tax benefits of the unlimited marital deduction are lost. Further, in California, all community property passes to the spouse, effectively disinheriting the children (by that marriage or former marriage) of the decedent.

Titled assets not passing by contract (IRAs, pensions, and life insurance) or operations of law (jointly owned property) come under the control of the probate court system. The court will appoint an administrator, whose fees are paid by the estate, to gather and inventory assets and liabilities. At the direction of the court, the administrator of the estate will publish notices to creditors and provide the court with relevant ownership information on titled assets. Adding to the expense of settling the estate will be legal fees for an attorney to represent the estate.

After the court provides for creditor payment, the balance of the estate will be distributed according to state law. If minor children are to receive a share, the court will appoint a guardian to care for the children and manage their inheritance according to court direction until that child is 18. At that point, ready or not, the children are on their own and all inheritances are theirs to manage.

The results of dying intestate include: 1) Loss of all control over who will manage your probate assets. The Court will appoint an administrator for you, 2) The State will determine who gets your assets, 3) The State will also determine who will raise your children.

You may wish to write your own will or use a pre-printed statutory will form. While these will get the job done, it has been my experience that it is better to seek out a qualified attorney for help in drafting a will. The attorney will often see areas that you overlook such as the need for minor’s trusts, durable powers of attorney for health and legal matters, plus planning opportunities to reduce potential estate tax liabilities. The few hundred dollars charged for these services are cheap compared to the alternatives of poor planning.