Dying Intestate

This week I am going to write about something that many (most?) people avoid. We are all alive for a limited time, and no one knows when his or her time is up. Yet we all seem reluctant to discuss and plan for our eventual demise.

I don’t know your financial situation, nor do I want to know it. Some of you might think you don’t have enough assets to have to make a will, so you might quit reading right here. However, just because you haven’t saved anything and don’t own very much, it is still possible that you have considerable “wealth.”

If you are employed, you likely have some form of group term life insurance through your employer. Most good companies provide at least an amount equal to two times your annual income free of charge with options to purchase more insurance at group rates.

If you own, or hold a mortgage or a loan on property, a house, a car, a boat, a motorcycle, then you probably have some form of life insurance on the balance you owe. Some credit card companies require that you have insurance on unpaid balances.

In short, there are many assets that you hold that only come into play upon your death, so you may be richer than you think you are. You had better not stop reading until you reach the end of the column.

Regardless of how much money, property or insurance you have accumulated, everyone needs some kind of a will. Even if you don’t own a lot, you should document what assets you want to go to each of your heirs when you die.

When there are children or multiple life partners—unfortunately, multi-marriage and multi-divorce have become a common experience—lack of a last will and testament are almost certain to cause feuds or lawsuits when a person dies.

If you die intestate—that means “without a valid will”—your property must pass through a process called probate. The court will decide who gets what, and it won’t necessarily be the person or persons whom you would have chosen.

For instance, if you are married and have children, regardless of their ages, and you die without executing a proper and legal will, your property will likely be divvied up in equal amounts among your wife and children. If the children are not at least 18-years-old (in some states, 21-years-old) the money will be held in trust and will not be available to your surviving spouse to help raise them.

In some cases, other relatives may inherit your assets, such as parents or siblings. Some of us would prefer that no assets go to certain people, but without a valid will the courts will decide in their favor. Oh yes, some of those assets will surely go to lawyers and others whom you never intended to receive it. That is what probate is all about.

Leaving aside the issues of property and insurance, a person who dies intestate leaves his or her children at the mercy of the courts. If both spouses die and no guardian has been designated in a will, the minor children become wards of the state. Children may be turned over to grandparents, aunts or uncles, but not necessarily according to your wishes.

If heirs are minor children of a former marriage, and the other natural parent is still alive, Absence of a valid will could entitle that parent to claim the children over the claim of the stepparent. Divorce is in and of itself a critical reason to have a will for all the same reasons given above.

After reading all of this, if you believe that none of this affects you, because you come from a long-lived family, think again. In this world, we could go at any time. Age and family history have nothing to do with it.

When I was younger, I sold life insurance, and we had a saying that we always quoted to our prospects: “Save like you’ll live to 100, but insure as though you’ll die tomorrow.” That applies to making a will just as much. Don’t let anything keep you from making a will to satisfy your wishes for your assets and care of dependents rather than letting some stranger decide for you.

It will probably cost you anywhere from a hundred to a thousand dollars to have a good will drawn up—on the low side if you don’t have a lot of assets—but it could save your heirs thousands of dollars in fees and taxes, and it will give you immediate and lasting peace of mind.