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Intestate Laws – When You Leave a Surviving Spouse
This is the second installment of our Intestate Laws series. In case you missed the first one, check it out here.
Probably the biggest misconception people have about dying without a Will is that their spouse will just get everything. Unfortunately, this is only the case under a small select set of circumstances. I don’t know about you, but taking a chance that my situation would fit one of the few circumstances where my husband would inherit everything we worked for is not enough for me to leave it to the intestate laws to determine the distribution of my estate. So what are the circumstances that leave everything to your spouse without a Will? The only way your spouse will inherit all of your intestate estate if you do not have a proper Will, is if you have no living parents or children. That is it. No other circumstances allow for your spouse to inherit your entire intestate estate. Outside of the intestate estate, the only other way to ensure that your spouse inherits everything is for you to be absolutely 100% sure that every single thing you own is titled jointly with your spouse with right of survivorship or that you have named your spouse as a beneficiary on everything. Speaking from experience, even the most diligent people forget to change beneficiary designations or something happens before they get around to it. It is simply too risky to leave something so important to chance.
So if your estate isn’t automatically given to your spouse, who does it go to? Well, that depends on who survives you. If you have surviving parents but no children, your spouse gets the first $30,000 of your intestate estate and then one half of the remaining intestate estate. If you have children, it doesn’t matter if your parents are still living. Although your parents will not receive a portion of your estate, the amount your spouse receives depends on whether your spouse is the biological or adoptive parent of your children. If so, your spouse, after getting the first $30,000, is splitting the remaining one half of the estate with your children. If your children are yours but not your spouses, your spouse no longer gets the first $30,000.
Let’s make this a little easier to understand. Meet Marshall and Violet – newly married, no children, but both Violet’s parents and Marshall’s mother are still living. When they got married, they moved into Violet’s house. Violent has not gotten around to adding Marshall to the deed and hasn’t bothered to fill out her life insurance beneficiary information. Violet suddenly dies, leaving behind a net estate of $130,000 proceeds from the life insurance and the house. Because Violet also never got around to writing a Will, she died intestate. As her surviving spouse, Marshall gets the first $30,000 from the life insurance and then must split the remaining proceeds and house with Violet’s parents. Marshall now owns a house with his in-laws. Let’s hope they get along.
Fast forward a few years. Marshall remarries and has two children, Alice and Jasper, with his new wife Stacey. Marshall didn’t learn from his first marriage and fails to write a will. He also never got around to adding Stacey to the deed from the house he had to buy his in-laws out of after Violet’s death. Marshall also never updated his retirement account and still has Violet listed as his beneficiary. Now the account is to be distributed through his probate estate since the beneficiary designation failed. Since they have children, Stacey does not have to share the house and retirement with Marshall’s mother, who has survived him. Instead, she must share it with her children. Stacey will get the first $30,000, but the remainder of the retirement account and the house are now split 50% to Stacey, 25% to Alice, and 25% to Jasper. Since Alice and Jasper are both minors, the Court has to get involved to protect their interests. Stacey learns her lesson and has a Will drafted right away.
But a few years later, Stacey’s new husband, Joe, not knowing what Stacey went through when Marshall died, never bothered to write a Will. At the time of their marriage, Joe moves into a new house with Stacey, Alice, and Jasper. The house is in joint names. Joe has an excellent relationship with Alice and Jasper, in fact, it is much better than the relationship he has with his own children, Lizzy and Gordo. Joe hasn’t spoken with Lizzy and Gordo in years. Joe doesn’t add Stacey as the joint owner or beneficiary on any of his retirement or bank accounts. When Joe suddenly dies, Stacey does not have to worry about splitting the house with Joe’s kids since it was jointly titled. However, Stacey does have to split all of the retirement and bank accounts with Joe’s kids. Since Lizzy and Gordo are not Stacey’s children as well, she does not get the first $30,000 before dividing the money. Alice and Jasper do not benefit from Joe’s estate at all.
While I might have enjoyed coming up with the above scenarios like one would enjoy writing a horror story, I’ve had to deal with these situations in real life. Trust me, it is not enjoyable to look someone’s loved ones in the eye and tell them that because their spouse failed to plan, their personal loss is compounded with financial complications that could have been avoided. It is heartbreaking to watch someone lose their house because of a caustic family relationship that creates a financial nightmare because someone died unexpectedly. Especially when a few relatively easy steps would have prevented the whole mess. It may not be pleasant to consider, but it’s imperative that we plan for the unexpected. Most people would never want to leave their loved ones to sort out an intestate estate that is not distributed in a manner that makes sense for their family’s situation. Consider what could happen if you do not plan. Meet with an attorney who focuses on estate planning and will help you plan accordingly.