The primary goal of an estate plan is to determine what will happen to your property and assets upon your death. In order to understand why it is so important to create an estate plan, it helps to discuss what happens to your property and estate assets if you die without executing a Last Will and Testament or creating a trust prior to your death.
A person who dies without a Will or trust in place is said to have died “intestate.” When a person dies intestate, the intestate succession laws of the state where the person was a resident at the time of death will determine what happens to the decedent’s estate assets. State laws can vary significantly; however, in most cases, intestate succession laws will disburse a decedent’s property to a spouse, children, parents and possibly other blood relatives. In Missouri, Missouri Revised Statutes Section 474.410 covers intestate succession distribution.
The way that intestate succession law in Missouri (and in most states) operates is that the law will first look to surviving spouse and children to distribute the estate. Your surviving spouse is entitled to half of the estate. In addition, your spouse will get another $20,000 if there are also surviving children and your spouse is the parent of those children. On top of that, there may be exempt property, such as personal possessions or an automobile, that your spouse is also entitled to under the intestate succession laws. If you do not leave behind a surviving spouse then the law looks to children then parents and siblings on down the line until all of your property is distributed.
While you may be fine with your spouse receiving half of your estate, remember that when you fail to execute a Will or establish a trust, this means that you do not get to decide which assets your spouse receives. In fact, in an intestate estate administration it is often necessary to sell all of the estate assets in order to provide for the proper distribution to the legal heirs of the estate.
It is also important to realize that if you die intestate, you give up the ability to make gifts to friends, charities, or even a beloved pet. A cherished childhood memento that you wanted your life-long best friend to have will likely be sold and the proceeds distributed to your heirs.
Finally, all of this loss of control is actually likely to cost your estate more money when it comes to probating your estate. Because the court must make a legal determination of who your heirs are, locate them, and then determine who is entitled to what, probating an intestate estate frequently costs more than probating a well drafted Last Will and Testament or avoiding probate altogether by creating a trust.
- How Tax and Non-Tax Considerations Impact Estate Planning – Part II - May 25, 2023
- How Tax and Non-Tax Considerations Impact Estate Planning – Part I - May 18, 2023
- The Joy in Joint Trusts - May 11, 2023