What happens to your stuff and family when you’re gone?
There are 3 things that may happen depending on how you’ve planned.
First, you have a comprehensive plan that avoids probate. In that case, your stuff will pass to your family with a minimum of hassles.
Second, you have only a Will. When you only have a Will, your family can look forward to the pains of probate. You see, a Will requires probate to be validated and activated. Only when a Judge says that it is valid does it start to work. More on probate in a minute. At least with a Will you have decided who gets what. But, your family still faces the pains of probate.
Third, you have the do nothing plan. That means that you haven’t done anything.
With the do nothing plan, your family faces probate, only without a Will to tell the court who gets what, when, how, and how much. You will haved passed intestate. This means “without a Will.”
If you aren’t familiar with probate, let me tell you about it briefly.
My checklist for probate has over 130 tasks, hearings, and checkpoints.
First, it is a public court proceeding. A Judge is in charge. Your worth will appear in the inventory and required accountings of the estate. If even one person doesn’t waive their right to appear, the process takes multiple hearings.
Your family will spend at least 8 months and possibly many years waiting for their inheritance.
When you are intestate (without a will), the State has written the rules. They have written the rules for who gets what, when, how, and how much.
Let’s start with your spouse and children. Most people assume that their spouse gets everything. However, in Arkansas, the default rule is one-third. 1/3rd of your personal property like money and 1/3rd of real estate in your name. The money is easy to split. The banks and other financial institutions will write checks in the proper amounts and issue them to your family. Your other belongings are also split 1/3rd, 2/3rds including cars, jewelry, and more.
For the real estate, your spouse only gets a “life estate.” This means they have use of the property for life then it goes to your children. Your spouse’s and children’s name will appear on the deed.
If your spouse needs or wants to sell, then everybody appearing on the deed will have to sign at the closing.
If your spouse wants to sell, then they only get 1/3rd of the value of the life estate. The value of the life estate is based on life expectancy. The older your spouse is, the less their life estate is worth. Your children get the rest.
If you have children receiving government benefits, a lump sum inheritance can mean the end of those benefits.
You can’t disown children without a plan. The rule is an even split between all your children, even if you haven’t seen them in 20 years.
It gets really complicated if you don’t have children. The default rules say your parents are next, then your siblings, cousins, ad naseum. If you wanted to leave everything to a favorite niece or nephew, the rules say otherwise.
The best way to prevent all of this is with a comprehensive estate plan.