What is Intestate?

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Definition:

If you die without a valid will, you die intestate, and a probate court may distribute your assets to your heirs according to the state’s intestate succession laws.

🤔 Understanding Intestate

Dying intestate can happen if you didn’t have a will at the time of death or if the court determined your will was invalid after you passed. Your assets, such as real estate, jewelry, and vehicles, transfer to your legal heirs through intestate succession. Your heirs under intestate law generally include your spouse or registered domestic partner and immediate blood relatives. States determine intestate laws, so where you live can determine how your belongings are divided. Some assets can skip the probate process, such as a life insurance policy with a named beneficiary. But if you don’t list a beneficiary, or if the beneficiary doesn’t survive you, the life insurance benefit can become part of your intestate estate.

Example

Let’s say you have a spouse, two daughters, and one son who has a child of his own. Under intestate law, your spouse almost always gets half of the estate. The other half is then divided among the remaining heirs. Your spouse would receive one-half of the assets you left behind, and each of your three children would get one-third of what’s left. Because all three of your children are living, your grandchild doesn’t receive anything under intestate law. But if your son doesn’t survive you, his child (your grandchild) is the next of kin and would generally stand in his place and receive your son’s share of the estate.

Takeaway

Dying intestate is like choosing to sit on the sidelines…

When you sit on the sidelines, you’re watching the game happen instead of being part of the action. Dying intestate without making a will, or without having a lawyer review your will to make sure it’s valid, is a passive approach to the game of life. You don’t get a say in how your property is distributed when you pass away intestate. If you get off the bench, you can make a will and have an active role in who gets what when you die.

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What is intestate?

Intestate is when you die without a valid will. If you die intestate, your state’s intestate succession laws determine how to distribute your property. There are three ways this could happen — You either don’t make a will at all, the court determines your will is invalid, or you don’t give away everything you own (which is partial intestacy).

When you die intestate, you don’t get to decide how your property is divided. Instead, a probate court transfers your assets according to intestate succession.

Each state sets its own probate laws, which includes who your heirs are when you die intestate. Your heirs are typically your next of kin, and those more closely related to you inherit first. The further down the bloodline you go, the less likely someone is to inherit anything from you.

Generally, spouses and children are the first to inherit and often share the estate between them. How a decedent’s estate is divided can depend on many factors, including whether your children are also your spouse’s children, if a child predeceased you, and which of your children had children of their own.

How does an intestate estate work?

If you don’t have a will when you pass away, your assets must be taken care of somehow. Intestate law is how states decide who gets what. Basically, intestate laws are the state’s way of making a will for you if you die without one.

Intestate succession only covers property that’s in a probate estate. Not all assets fall under intestacy laws, which means they’re not probate assets. Some of your things might skip the probate process altogether.

If you have property that transfers to a named beneficiary upon your death, that’s not generally a probate asset. For instance, life insurance policies, most 401k plans, and IRAs ask you to list a beneficiary to receive the funds upon your death. They usually ask for a contingent beneficiary, too — A contingent beneficiary receives the payout if the primary beneficiary predeceases you.

Without a living beneficiary or contingent beneficiary, the funds from these accounts can become part of your probate estate, and then be dispersed under intestate law.

Depending on how a deed is written, real estate might not be part of a probate estate, either. If you buy a home with another person and your deed is held as joint tenancy with full right of survivorship, the property might not be subject to intestate law. That’s because the title automatically transfers to someone else upon the death of an original owner.

For example, if you bought a house with your aunt as joint tenants with full right of survivorship, your share of the property transfers to your aunt when you die.

You could also own stocks, bank accounts, cars, or other property titled as joint tenants with full right of survivorship. Because the assets automatically transfer to the surviving owner, they aren’t generally part of the probate process.

What happens if you die intestate?

No one likes to think about their own mortality. Putting in writing who gets your belongings when you pass away can feel uncomfortable. But without a will, you don’t get a say in who gets your things.

Your heirs usually start with your spouse and children, followed by your grandchildren. That means if you promised your antique coin collection to your nephew, he’s unlikely to receive it under intestate law because he would be so far down the list of intestate succession.

You could also die with partial intestacy. This happens if you die with a will, but you forgot to include something in it. For instance, if you created your will in your 30s, you probably made sure to account for all of the belongings you had at the time.

Let’s say you bought a new car when you were 62 but didn’t update your will to say who would get the car upon your death. Because everything but the car is given away according to the terms of the will, you have a partial intestacy where only your car is transferred under intestate law.

How does probate work when there is no will?

You may need to go through probate court whether or not there’s a will, depending on what assets are left behind and what arrangements have been made for passing them on. The court process is generally the same, with a few exceptions.

If you die with a will, the person designated in the will to be the personal representative (sometimes called the administrator or executor) usually files for a probate case. If you die intestate, there isn’t anyone preselected to be the personal representative.

Someone else, usually a family member, can file paperwork with the court to open a probate estate. A probate court can then appoint someone to be the personal representative.

The personal representative will typically start by collecting the decedent’s assets and paying creditors and other expenses. Once the debts are settled, they can distribute what’s left of the assets to the heirs according to the state’s intestate succession laws.

Also, keep in mind that probate laws are determined at the state level. Check with your state laws or your local probate court to find out what the law requires where you live.

How does intestate succession work?

Intestate succession exists to provide a reasonable and orderly method of transferring assets when someone passes away. Most states adopted all or part of the Uniform Probate Code, though each state has its own set of probate laws in place. Probate and intestate laws can be very different from each other, depending on which state you’re in.

Intestate laws typically put heirs into groups according to how they’re related to the deceased person. Generally, the spouse is in the first group if they survived the decedent. Children are often next, followed by grandchildren and great-grandchildren. The next group consists of the parents, and then the descendants of the parents, and so on.

Who gets what depends on who is still living when the decedent passes away. For instance, a surviving spouse almost always gets the majority of the estate. If there is no qualified spouse, but there are children, the children are usually next in line to receive the property.

Who inherits what when there is no will?

When there is no will, laws of intestacy take over the decision of who inherits property and what property they get. But families can be complex, and step-relationships, half-blood relations, and adoptions can complicate matters.

Because laws vary by state, the family situation might be treated differently if the decedent lived in, say, Michigan as compared to Texas.

For example, in Michigan, someone who is related by half-blood inherits the same as if they were a whole-blood relative. But in Texas, someone who is half-blood only inherits half of what they would get if they were whole blood. That means if Carol and Frank have the same father but two different mothers, their inheritance might be different than their siblings who share the same parents.

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This information is educational, and is not an offer to sell or a solicitation of an offer to buy any security. This information is not a recommendation to buy, hold, or sell an investment or financial product, or take any action. This information is neither individualized nor a research report, and must not serve as the basis for any investment decision. All investments involve risk, including the possible loss of capital. Past performance does not guarantee future results or returns. Before making decisions with legal, tax, or accounting effects, you should consult appropriate professionals. Information is from sources deemed reliable on the date of publication, but Robinhood does not guarantee its accuracy.

Robinhood Financial LLC (member SIPC), is a registered broker dealer. Robinhood Securities, LLC (member SIPC), provides brokerage clearing services. Robinhood Crypto, LLC provides crypto currency trading. All are subsidiaries of Robinhood Markets, Inc. (‘Robinhood’).

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© 2022 Robinhood. All rights reserved.