Many times clients come to my office and they feel a little embarrassed because they say, "Even though I know I need one, I don't have a will yet." Often, it's simply a matter of they just haven't gotten around to it. And while they may feel embarrassed, the reality is, many people do not have wills. The last statistic I saw said that only 33.1% of Americans actually have an estate plan, which means two-thirds of Americans don't have a will. And if you're in that boat with all of them, don't be ashamed. But now is the time to get your estate plan in order.
If you have a will, what you've done is you've laid out a process for what will happen after you're gone. You'll have a process for guardianship of children, what happens to your assets, and how liabilities are paid off. Maybe you've created a trust. There are a lot of options when you have a will. If you're in a state like Minnesota, Minnesota has informal probate. We can use the will to put your estate through informal probate, a much less intense version of probate than you'll find in other places. And the goal of course of all this is we're going to make it easier on your family. They don't have to deal with the probate judge. They don't have to go through a lot of extra paperwork. A lot of times they don't have to hire an attorney. It's a simplified way of laying out your state. But what if you don't have a will then what is the plan? Well, if you don't have a will you actually have created a plan and that plan is you're going to have the state do what the state says with your things. So that becomes your "estate plan."
What Does "Intestate" Mean?
When you die without a will, the legal term is called intestate. What happens then is the state's laws are used to create a will for you. What that means is that your family has to go to court and sort out your affairs. They have to file a petition with the court to start a case. It's called Probate Court. In many cases, you can't opt for informal probate in Minnesota if you don't have a will, because the court's going to have to be involved with making major decisions. And that's not going to be classified as informal probate.
Issues to Sort Out
If you die intestate in Minnesota, the Court has a variety of issues it will need to sort out, including
- Who's going to be your personal representative? ~ the person who's going to be in charge of this whole process, the person who has to transfer your assets and take care of your liabilities. The court has to choose someone to do that.
- Who's entitled to your assets? ~ One of the things your family may have to end up doing is literally drawing out a whole family tree for the court. And then the court has to take that family tree and look at the statute and figure out who is entitled to inherit.
- Who do you have to give notice to? ~ You have to give notice to all those leaves on that family tree. Everybody who could inherit gets notice and then they have to decide whether they're going to object to the notice or not.
You can probably guess this draws the process out a lot longer and creates a lot more legal fees and expenses with your family. If you aren't married to your partner, let's say you're just living with a girlfriend or boyfriend, you created a major problem because they might not even be entitled to inherit. Let's say you have a long-lost brother who you haven't spoken to in years, but you're not married to your girlfriend, that brother may be the person who's inheriting everything in your estate, and your girlfriend may be left without anything.
You don't control who gets your assets if you don't have a will. That means the court will decide who is going to get your assets and it could end up being with somebody who you wouldn't want to inherit.
Who Makes Money When You Die Intestate?
You may not realize this, but the people who love when you die intestate are attorneys because we're the people who make all the money on your estate. When this happens, your family members don't know what to do with the court system. They don't know how to make filings. They have to come see an attorney to figure out what to do next. And those attorney fees can really rack up. We have to create that family tree and find all of your possible beneficiaries and send them all notices and work with the court. The legal fees add up and add up and add up.
So from an attorney standpoint, when you have somebody who dies without a will, we see a good source of business. I'm not discouraging you from paying for attorneys. But I'm telling you, there's a way you can really simplify this for your family: Create a will
So there are two things you're going to do if you don't have a will and you want to get started right now. The first thing you're going to do is check your beneficiary designations. You may or may not know that if you have a beneficiary designation, that asset passes directly to that person who's named as the beneficiary. Now if you don't have anybody named, or if for some reason your beneficiary says to my estate, then you're going to have to go through the probate court to distribute that asset. But if you have your girlfriend as the beneficiary on your 401 K plan, that plan can be distributed directly to her. And once we've checked the beneficiaries, the next thing you're gonna do is reach out and get an estate plan. You're not going to do just a will you're going to do all of the documents a healthcare power of attorney a Living Will a durable power of attorney, and HIPAA authorization guardianship provisions. If you have children, we want to make sure it all gets done. It sounds daunting, but it's not. But you want to make sure it's done so you don't leave this intestate problem for your family to sort out.
Hopefully, you can see that it's important that you're working with an attorney, financial advisors, and your accountant to make sure you're getting it laid out correctly. If you need help and you need to get started, let's set up a Legal Strategy Session. We can chat for about 15 or 20 minutes to discuss where you are in the process, what your goals are, and what are the best next steps for you and your estate plan.