WHAT IS Intestacy
Intestacy refers to the condition of an estate of a person who dies without a will, and owns property with a total value greater than that of their outstanding debts. In addition, a will that covers only part of an estate sometimes is intestate. In either of these instances, a probate court often distributes the assets of the deceased.
Typically, property goes to a surviving spouse first, then to any children, then to extended family and descendants, following common law. If no family can be found, property typically reverts to the state.
BREAKING DOWN Intestacy
Intestacy rules vary meaningfully by state, and they are fairly complex. Of note, some states treat domestic partners differently, or do not have well-defined statutes that explain the rights of domestic partners, especially same-sex partners. In a number of states, all registered domestic partners are legally the same as spouses, but that’s not true everywhere.
Most states have rules that keep people who have behaved badly towards the deceased from receiving inheritance. For example, anyone responsible for the death of the deceased, or who did not pay child support for a child that died, cannot profit from their deaths.
In general, courts try to split up any real estate holdings, life-insurance proceeds, securities, bank accounts and personal property of the deceased, once all debts of the estate are paid.
State law usually determines who is the personal representative or executor. A probate court makes this determination. In general, a surviving spouse is the first choice. In many states, domestic partners have the same rights as surviving spouses. Adult children typically are next on the list. Being a personal representative requires a flurry of work in a short amount of time. Sometimes it’s frustrating, especially if beneficiaries squabble about the estate or contest the will. Also, a personal representative usually is personally liable for any claims of fraud or mismanagement by the beneficiaries.
Difficulties of Intestacy
Intestacy laws essentially try to make the best of difficult situations. Consider the estate of pop icon Prince. Because the music artist died intestate and the value of his assets were difficult to point down because they included rights to his vast music catalog, as well as the rights to his name and likeness, heirs still had not received a penny in inheritance more than two years after his death.
In almost all cases, intestacy is best avoided. A will is perhaps the easiest way for people to direct who should inherit their assets.