Estate Planning Basics, Part 1: Dying Without a Will
As the saying goes, “tomorrow is promised to no one.” So, what happens if tomorrow never comes and you never got around to drafting a will or trust?
Dying without a will is called “dying intestate”. When someone dies in North Carolina without having executed a will, the state’s intestate succession statutes control the disposition of the assets the individual owned at their death. The deceased’s wants and intentions no longer matter at this point. Sometimes the state’s rules will make the same distributions that you would have made had you drafted a will, but that’s not normally the case.
How your assets will be distributed under the intestate succession rules will depend on your family situaiton at the time of your death. There are specific rules meant to protect the interests of surviving spouses and children. Below is a summary of the intestate succession rules for most family situations:
- Children but no Spouse = children inherit everything;
- Spouse but no descendants or parents = spouse inherits everything;
- Parents but no spouse or descendants = parents inherit everything;
- Siblings but no spouse, descendants, or parents = siblings inherit everything.
Here’s where it gets more complicated. Anything other than the two options listed above requires some math to be successful:
- Spouse and one child or descendant of one child: Spouse inherits 1/2 of your intestate real estate and a portion of your intestate personal property (if you die with personal property worth $60,000 or less, your spouse inherits all of it; if you have more, your spouse inherits the first $60,000 plus 1/2 of the balance). Your child (or its child(ren)) inherit 1/2 of your intestate real estate and any intestate personal property remaining after the spouse’s share;
- Spouse and two or more children/descendants: Spouse inherits 1/3 of your intestate real estate and a portion of your intestate personal property – same rules as (1.) above, except the spouse’s share over $60,000 reduces to 1/3 and the children get the remaining 2/3;
- Spouse and Parents: Spouse inherits 1/2 of your intestate real property and a portion of your intestate personal property (if you die with personal property worth $100,000 or less, your spouse inherits all of it; if you have more, your spouse inherits the first $100,000 plus 1/2 of the remaining balance). Your parents inherit 1/2 of your intestate real estate and any intestate personal property remaining after the spouse’s share.
These are the state’s default rules in North Carolina. If you wish to have some distribution other than what’s set out above, you have to use a Will or Trust. A future post will discuss the practical and administrative ramifications of dying without a will, other than just the intestate succession rules set out above.