Intestate Succession: What Is It and How Do You Avoid It?

To expedite the distribution of your estate and increase your family’s financial security after your death, avoid intestate succession.

Unfortunately, 54% of U.S. adults lack the one document required to circumvent intestate succession.

What Is Intestate Succession?

If you die without a valid will (or you have a will but all beneficiaries are deceased), a probate court determines how your property is distributed. This process is known as intestate succession and varies by state. Ultimately, without a will, the state you live in becomes the executor of your estate.

Technically, when a person dies without a will they have “died intestate.”

Who Receives the Property by Intestate Succession?

If you do not have a will, states often follow the Uniform Probate Code to determine who receives your property after your death. The code is a body of uniformed estate law adopted by many states in part or in whole.

How To Avoid Intestate Succession

It’s easy to avoid intestate succession by creating a last will and testament, a legal document identifying how you want your property distributed. A will is a key component of a comprehensive estate and financial plan.

Property Excluded From Intestate Succession

Intestacy laws apply to property not addressed in a will. However, there are many assets that may be excluded from intestate succession because they are co-owned or have a named primary beneficiary, including:

• AnnuitiesA financial instrument that pays the holder a guaranteed stream of payments. The annuity is funded by either a lump sum (one-time) or a series of deposits. Once funded, the sum is invested by the insurance company who sold the annuity (the accumulations phase). After a certain trigger (for example, the holder’s retirement or reaching a certain age) payments begin to be issued to the holder (annuitization phase). Annuity payments may be fixed or variable in both amount and in length (some pay out for a designated span of years, others until the holder’s death).
• Joint Property (e.g., primary residence)
• Life Insurance Proceeds
• Mutual Funds
• Payable-on-Death Bank Accounts
• Property Transferred to Living Trust
• Pension and Retirement Accounts

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Intestate Succession and Unique Family Situations

In most states, special family circumstances are not considered during intestate succession. For example, foster and stepchildren have no rights to your estate unless legally adopted (there are a few state exceptions).

Intestate Inheritance vs. Testate Inheritance

Possessing a valid will is the key difference between intestate and testate inheritances. Specifically, dying intestate means the decedent has no valid will, while dying testate means a will is in place.

Next Steps

One way to show loved ones you care is ensuring they receive their rightful inheritance after your death. The first step is creating a will, ultimately avoiding intestate succession. The legal considerations are plentiful; therefore, we recommend consulting with an estate attorney. Of course, finding the right attorney is no easy task, and is why we created this exclusive special report: 10 Essential Questions To Ask an Estate Planning Attorney.

Contact Adviser Investments anytime for assistance with any legacy or wealth management needs. We pride ourselves on being The Planner You Can Talk To.

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