Many people assume that their spouses or children will automatically be provided for upon their deaths. With that expectation, it’s easy to view a will or living trust as a tool that may make the process smoother, but won’t have much substantive impact if you’re only concerned about taking care of your immediate family. However, intestate succession is actually more complicated than most people realize, and may result in distributions that are not at all what you intended. In addition, managing an intestate estate can be complicated, and may require that assets be sold off to comply with the statutory formula for distribution.
Intestate Succession in New Jersey
State law determines how property is distributed if the deceased failed to make legal arrangements.
Many people assume that if they pre-decease a spouse, the spouse will automatically inherit everything. This is true only under certain limited circumstances. The surviving spouse (or domestic partner) will inherit the entire estate only if:
- The deceased has no surviving descendant or parent, or
- All surviving descendants of either the deceased or the surviving spouse or domestic partner are descendants of both
If the decedent is survived by a parent or by a descendant who is not the descendant of the surviving spouse, or even if the surviving spouse has a descendant who is not a descendant of the deceased, complicated formulas ensue.
For example, if there are no surviving descendants, but there is a surviving parent, the spouse will inherit the first 25% of the estate. However, if 25% of the estate is less than $50,000, the surviving spouse will inherit $50,000. Similarly, the “first 25%” award is capped at $200,000. After that award is calculated, the surviving spouse receives an additional 3/4 of the remaining estate. The equation changes, though, if the decedent is survived by a descendant who is not also a descendant of the surviving spouse. Then, the surviving spouse will receive the first 25% (subject to the same $50,000/$200,000 limitations) plus ½ of the remaining estate.
Each combination of surviving heirs triggers a similarly complex calculation.
Intestate Succession in New York
Each state’s laws dictate different distributions and a different set of calculations. Distribution of the estate might be entirely different in New York than in New Jersey, although the decedent left behind exactly the same relatives and potential heirs.
In New York, for example, the surviving spouse inherits the full estate if the decedent leaves behind no descendants. Parents of the decedent are considered only if there is no surviving spouse and there are no descendants. Further, the calculation is the same whether descendants of the deceased are also descendants of the surviving spouse or not.
Administration of the Intestate Estate
An additional complication for heirs is that if the decedent did not leave a will, he or she has not appointed an executor. That means that someone will have to petition the probate court to be appointed as administrator of the estate. This can lead to conflicts among heirs, and may end with someone the decedent would not have chosen to handle his affairs being appointed.
Administration may also be complicated in intestate estates because there is no direction as to which assets should be distributed to whom. If the estate consists largely of real and personal property rather than cash and other liquid accounts, the administrator will have to determine which assets to sell or to distribute directly in order to create the appropriate percentages.
This may mean that the administrator is forced to sell property the decedent expected to pass directly to a surviving spouse or child.
Avoiding the Complications of Intestate Succession
Your best defense against the pitfalls of allowing the state to determine how your property is distributed after death is a comprehensive estate plan. While an up-to-date will is the most common means of managing succession planning, it is not the only option. Some people choose to employ a living trust as a means of passing property while allowing heirs to avoid the probate process. In some circumstances wherein the estate is limited, joint ownership of property may provide the smoothest transition.
An experienced estate planning attorney can assist you in identifying the best approach for your family, based on your assets, your intended beneficiaries, and your priorities.