What is Intestate Succession?

Intestate Succession Guide

Intestate succession refers to distributing deceased people’s assets when they die without a valid will. This legal framework ensures that the deceased’s property is transferred to their closest living relatives according to state laws. Understanding intestate succession is crucial, as it affects many individuals when one passes away without proper estate planning.

Dying Without a Will

When a person dies “intestate,” they have not left behind a legally valid will or other estate planning documents to dictate how their assets should be distributed. This situation is more common than many people realize. According to recent studies, approximately 50-60% of Americans still need a will or estate plan.

There are various reasons why individuals might die without a will.

1. Procrastination: Many people put off creating a will, thinking they have plenty of time to do so later.
2. Lack of awareness: Some individuals may need to understand the importance of having a will or may believe their estate needs to be bigger to warrant one.
3. Misconceptions: People might incorrectly assume that their assets will automatically go to their spouse or children without a will.
4. Complexity: Creating a will can seem overwhelming, leading some to avoid it altogether.
5. Cost concerns: While creating an essential will is often affordable, some may perceive it as unnecessary.
6. Superstition: Some think making a will is “tempting fate” or inviting death.

Regardless of the reason, dying without a will can lead to complications for the deceased’s family and potentially result in the distribution of assets in ways the deceased may not have intended.

State Intestacy Laws

When a person dies intestate, their estate is distributed according to the state’s intestacy laws, where they were legally domiciled at the time of death. These laws vary from state to state, but they generally aim to distribute the deceased’s assets to their closest living relatives in a predetermined order.

Key aspects of state intestacy laws include:

1. Uniformity: Many states have adopted some version of the Uniform Probate Code (UPC), which provides a standardized set of intestacy rules. However, even states that use the UPC may have modifications to suit their specific needs.
2. Spousal rights: Most states prioritize the surviving spouse in intestate succession. However, the exact share they receive can vary depending on whether the deceased also left behind children or other close relatives.
3. Descendants’ rights: Children and other direct descendants typically have substantial inheritance rights under intestacy laws.
4. Extended family: If there is no surviving spouse or descendants, intestacy laws usually provide for distribution to parents, siblings, and more distant relatives.
5. Escheat: In rare cases where no legal heirs can be found, the estate may “escheat” to the state, meaning the state takes ownership of the assets.
6. Community property: Many states follow community property laws, which can affect how assets are distributed in intestate succession.
7. Adoption and non-marital children: State laws typically address the inheritance rights of adopted children and those born outside of marriage.

It’s important to understand that intestacy laws apply only to assets that would have been included in a will. Assets like life insurance policies with designated beneficiaries, property owned jointly with rights of survivorship, and assets held in trusts generally bypass probate and are not governed by intestacy laws.

Heir Determination and Priority

Determining heirs and their priority in intestate succession is a crucial part of the process. While specific rules vary by state, there is generally a hierarchical order for distributing assets:

1. Surviving Spouse: In most states, the surviving spouse is first in line to inherit. However, the amount they receive can depend on whether the deceased also left behind children or other close relatives.
2. Children: If there is no surviving spouse or the spouse is only entitled to a portion of the estate, the deceased’s children are typically next in line. In many states, children inherit equally.
3. Parents: If no surviving spouse or children exist, the deceased’s parents often inherit next.
4. Siblings: Brothers and sisters (including half-siblings in many states) may inherit without a surviving spouse, children, or parents.
5. Grandparents: If no closer relatives survive, grandparents may be next in line.
6. Aunts, Uncles, and Cousins: More distant relatives may inherit if no closer relatives are alive.
7. State: The estate typically escheats to the state if no legal heirs can be found.

Several factors can complicate heir determination.

• Stepchildren: In most states, stepchildren do not automatically inherit in intestate succession unless they were legally adopted.
• Half-relatives: Many states treat half-siblings (those who share one parent) the same as full siblings in intestate succession.
• Posthumous children: Children conceived before but born after the deceased’s death are generally treated the same as children born during the deceased’s lifetime.
• Predeceased heirs: If a potential heir dies before the deceased, their share may pass to their descendants (known as “per stirpes” distribution) or may be divided among other heirs (known as “per capita” distribution), depending on state law.

Intestate Estate Administration

Administering an intestate estate involves several steps and can be complex. The process typically includes:

1. Initiating probate: Someone (usually a family member) must petition the court to open a probate case and be appointed the estate’s administrator.
2. Administrator appointment: The court appoints an administrator to manage the estate. This is often the surviving spouse or an adult child, but the court may appoint another relative or a neutral third party if necessary.
3. Asset inventory: The administrator must identify and inventory all of the deceased’s assets subject to probate.
4. Debt payment: The administrator must notify creditors, pay valid debts, and file final tax returns for the deceased.
5. Heir identification: The administrator, often with the help of an attorney, must identify the legal heirs according to state intestacy laws.
6. Asset distribution: After paying debts and taxes, the remaining assets will be distributed to the heirs according to the state’s intestacy laws.
7. Final accounting: The administrator must provide a final accounting to the court and beneficiaries, showing how the estate was managed and distributed.

Challenges in intestate estate administration can include:

• Family disputes: With a will to provide clear instructions, family members may agree about asset distribution or the administrator’s choice.
• Unknown heirs: Locating and verifying all legal heirs can be difficult, especially for more distant relatives.
• Asset valuation: Determining the fair market value of unique or complex assets can be challenging.
• Debt prioritization: If the estate doesn’t have enough assets to pay all debts, the administrator must prioritize payments according to state law.
• Tax implications: The lack of estate planning can sometimes result in higher estate taxes than necessary.
• Business continuity: If the deceased owned a business, intestate succession can complicate business operations and succession planning.

Intestate succession is a complex law area affecting many individuals and families. While state laws provide a framework for distributing assets without a will, the process can be time-consuming, potentially costly, and may not align with the deceased’s wishes. This underscores the high value of proper estate planning, including creating a valid will to ensure that one’s assets are distributed according to one’s preferences and to minimize potential conflicts and complications for one’s loved one.

To learn more and get help, contact The NJ Executor for professional and expert assistance.