Without a will, you die “intestate,” which means you have no say in the transfer of your estate. To understand what that means, it helps to explore the basics.
What is a Will?: A will is a legal declaration by which a person names one or more persons to manage his/her estate and provides instructions for the distribution of property at death. Whether your estate includes a large amount of assets or just a house and checking account, a will is recommended to help settle your estate.
A will addresses the following questions:
- How will your final bills be paid?
- How will your estate taxes and/or inheritance taxes be paid?
- Who will oversee the settling of your estate?
- Who will care for your children (if applicable)?
- Who will get the balance of your estate, and when?
How is an Estate Settled without a Will?: If there is no legal document that specifies how to settle your estate, the process to distribute your assets without a will is called an administration. The exact process varies from state to state, but here are the general steps.
The County Surrogate Court appoints an administrator, an individual who has the legal responsibility of settling the estate. The judge will appoint the closest relative, such as the spouse or registered domestic partner and then move on to adult children and other family members.
Once the court validates the will, the administrator can carry out its terms. The administrator collects and preserves assets, pays any debt, determines what happens to the property and distributes your estate to the heirs.
Some states have simplified processes for settling an estate if its value is less than a designated amount. In New Jersey, the administrator may take advantage of the simplified process for settling an estate if the value is less than $20,000.
Without a will, settling an estate through court presents numerous downsides:
- It takes additional time to finalize your estate.
- It puts extra stress on the administrator who must act on your behalf.
- You have no control over who receives your assets.
- You have no say in who is appointed legal guardian of your children.
- You are unable to donate to your favorite charity.
- It may be more costly because wills are carefully planned to minimize – even eliminate – inheritance taxes.
Having a will makes it easier for the family members who will be responsible for settling your estate. And, that is a good reason to start the process.
About the Author: Jeffrey J. Buonforte is executive vice president of Lakeland Bank, with 51 offices spanning eight northern New Jersey counties.