In an effort to help NARFA Members face the many issues associated with estate planning, business planning, and insurance review and placement, NARFA and Thomas Brady & Associates continue to work together to bing you helpful answers to your most pressing questions.
Today, we bring you the third article in our ongoing series, Estate Planning Basics. The information within Dying Without a Will or Estate Plan and What Would Happen to Your Property is designed to help you protect your life’s work.
Estate Planning Basics: What Happens to Your Property If You Die Without an Estate Plan
When a person dies without a will or other estate plan, it is referred to as dying “intestate.” Every state has its own set of rules for how the person’s property will be distributed upon death if he or she did not properly plan for the event.
In Massachusetts, like many other states, there are different dispositive rules that apply depending upon whether the person who died (the “decedent’) was survived by a spouse, children, parents, or next of kin. However, it is important to note that these rules apply only to property that was titled in the decedent’s name at the time of his/her death and which did not otherwise specifically designate a beneficiary (e.g., “pay on death,” or “transfer on death,” etc.).
The chart below illustrates the various provisions that apply depending on one’s particular situation. The first four scenarios are those where the decedent was survived at least by a spouse. The last five scenarios are those where the decedent was not survived by a spouse.
|If you are survived by:||Your estate is distributed:|
||All to spouse|
||Where the estate is less than $100,000, all to spouse.If the estate is larger than $100,000, the first $100,000 plus one half of everything in excess of $100,000 to spouse. The remainder to the decedent’s descendants per capita at each generation.|
||Where the estate is less than $200,000, all to the spouse.If the estate is larger than $200,000, the first $200,000 plus ¾ of everything in excess of $200,000 to spouse. The remainder to the parents in equal shares, or all to the survivor.|
||All to spouse|
||All to descendants per capita at each generation|
||To parents in equal shares, or all to the survivor.|
||To the descendants of the decedent’s parents or either of them per capita at each generation|
||In equal shares to the decedent’s next of kin in equal degree|
||All “escheats” to the Commonwealth of Massachusetts; that is, all is turned over to the state because there are no heirs or beneficiaries.|
As you can see, in the first situation, where a decedent was married to only one person and had children only with that one spouse, all of the decedent’s property will go to the surviving spouse. This is based on the theory that the interests of the surviving spouse and the children of the marriage are completely aligned.
Of course, there are many situations where the children and the surviving spouse do not get along and their interests are not necessarily aligned. In such cases, while it might be true that the decedent would want all of his/her property to go to the surviving spouse, it is also reasonable to think that some other, more balanced, distribution would be desired.
Similarly, in situation #3, where the decedent is survived by a spouse and a parent (but no children), the vast majority of the decedent’s property will be distributed to the surviving spouse, but ¼ of the property in excess of $200,000 will go to the decedent’s parents. Just like scenario #1, the state makes assumptions based on broad generalizations. But those assumptions may not be appropriate for your particular case.
Those assumptions, together with the other reasons for estate planning that have been outlined in previous posts, suggest that you should take the time to do a proper estate plan in order to ensure that your property is transferred to your family and friends in a manner that fits your particular needs and wants.
© Copyright 2014 Thomas Brady & Associates, Boston, Massachusetts. All rights reserved. To ensure compliance with IRS requirements, we inform you that any federal tax advice contained in this communication (including any attachment) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed in this communication (including any attachment).
NARFA is proud to endorse Thomas Brady & Associates. For more information on estate planning specifics and estate planning basics, please visit NARFA’s Estate & Business Planning Services page or contact us today.
We also encourage you to catch up on the latest from our Estate Planning Basics series, including Estate Planning Basics, Part 1: What to Know About Intra-Family Loans, and Estate Planning Basics, Part 2: Why Do I need to Have an Estate Plan? I Don’t Even Have an Estate!
At NARFA, we’re always here to answer your questions and help you navigate life’s most complicated situations! Contact us today.