If You Die Without a Will, Does Your Spouse Inherit Your Entire Estate?
If you are married and you die without a Last Will and Testament, you may mistakenly believe that your spouse will still inherit your entire estate. Not so fast. Who will inherit your estate depends on several different factors:
1. How is your property titled? Is your property titled in your name alone, in joint names with your spouse, in joint names with a child or other relative, or does it have a beneficiary designated? Knowing how all of your property is titled is the real key to understanding who will inherit it after you die. For example, if your home is titled in joint names with rights of survivorship with your spouse, then your spouse will inherit the home. However, if it is titled in your name alone, then your spouse may or may not inherit the home as determined by applicable state laws. These laws are referred to in the U.S. as “intestacy laws” and are discussed below in item #3.
2. Did you and your spouse sign a prenuptial or postnuptial agreement? The right to inherit property from your spouse can be legally waived in a valid agreement signed before you get married (a prenuptial or premarital agreement), or after you get married (a postnuptial agreement). If you and your spouse entered into such an agreement, then the legal effect of a full waiver of inheritance rights is to treat your spouse as having predeceased you. You and your spouse may also agree to only waive certain inheritance rights, such as the right to inherit your IRA or 401(k).
3. What does your state’s intestacy laws say? You may be surprised to learn that the intestacy laws of many U.S. states do not require the entire estate of a deceased married person to be distributed to their surviving spouse. In some states, such as in New York, the surviving spouse must divide the estate with the deceased spouse’s children, if any, otherwise with the deceased spouse’s parents or siblings. When real estate is involved, this may lead to a family feud. For example, the surviving spouse may want to sell the real estate and the children or parents may want to keep the real estate. Also, if you own real estate located outside of your home state, then the intestacy laws of the other state will govern who will inherit your real estate located there, while the laws of your home state will govern who will inherit everything else. This could result in different beneficiaries of your out-of-state real estate and the rest of your estate, leaving your family with quite a mess.
4. If you have a child or sibling with special needs who relies on public assistance, the intestacy laws could result in the disqualification of these extremely important benefits. A Supplemental Needs Trust is an integral component of an effective estate plan to insure that a loved ones benefits will not be lost.
What Should You Do?
If you are married and you want your spouse to inherit all of your property, then the only way to be assured that this will happen is to consult with an attorney who is familiar with the inheritance laws in your state and any other state where you own real estate (yes, you may need to consult with two different attorneys). The attorney will be able to review how all of your assets are titled and then help you determine the options for making sure that your spouse will be the only beneficiary of your estate. The best approach is to meet with an attorney who will take the time to understand your wishes and your goals to design a plan that will protect your loved ones. Do not let the State dictate the distribution of your assets when you die.