‘E-S-T-A-T-E’: Take Care of Your ‘T’ and ‘E’
Anyone who owns property, both real and personal, should plan for how these assets will be managed, controlled, and divided when they are no longer around. The more complex a person’s financial holdings, the more an estate plan is needed to ensure the distribution of assets is fair and follows the wishes of the deceased. The recent death of song legend Aretha Franklin starkly highlights how even those with significant resources might fail to execute something as basic as a will. With no will or other estate planning, Aretha Franklin’s estate is already heading toward a fight, as a niece seeks appointment as the personal representative while there are four sons with an interest in the estate.
Having a will or trust to administer an estate and distribute estate assets is critical. Further, without the instruction a will or trust provides, the state will decide how a person’s property will be distributed (according to the state’s intestacy laws). Intestacy laws govern the division of property for an individual who dies with probate property but no will to direct how the administration should be handled. Moreover, with an intestate estate, the holdings of the estate and full details of any dispute are public information, as are all matters decided by the courts. This scenario could easily lead to an estate that is divided contrary to the deceased’s wishes and would leave out potential bequests to extended family, friends, and charitable organizations. Below is a discussion of how Georgia handles intestate estates (estates of individuals who die without a will) and some additional repercussions that illustrate why estate planning is so critical.
Property Distribution Without an Estate Plan
During our lifetime, we accumulate possessions. These possessions must be accounted for and managed after our death. To ensure the administration process is regulated and fair, Georgia (and all other states) has a court-supervised procedure, called probate, that oversees the administration of estates distributed via state intestacy laws. Any property solely owned by the deceased at the time of death must go through probate before an heir has legal rights to receive such property. Probate assets do not include retirement plans and life insurance policies with beneficiary designations, which automatically pass to a named beneficiary at the deceased’s death. Probate assets do not include property owned jointly with right of survivorship. For intestate estates, the state establishes an order of priority for distribution of estate assets, starting with immediate relatives (according to spousal and blood relation), to the exclusion of other interested parties. Surviving spouses, children, parents, and siblings all receive preferential rights to any property of the deceased, owned in a certain order as established by the state. For example, if the deceased dies with a surviving spouse and no children, the surviving spouse inherits everything. If there is a surviving spouse and children, then they all share equally, although the surviving spouse will receive no less than one-third of the estate. If there are only surviving children, each child will receive an equal share of the estate. Grandchildren are next, then living parents, and then siblings. The list continues until the estate is able to find a living relative regardless of how distant. Eventually, if there are no living relatives, the estate will go to the state; but this is not the preferred outcome.
Why Estate Plans Matter
As noted above, dying without a will means a person’s assets are distributed according to the state’s priorities and not the deceased’s wishes. Perhaps more importantly, an intestate situation is ripe for dispute among family members, which can morph into drawn-out litigation, permanently damaged relationships, and a depletion of estate assets. In addition, without an estate plan, the deceased has no say in who serves as executor or personal representative nor how important holdings (such as family businesses) are addressed. Without a will, parents of minor children leave the determination of guardianship for their children up to the courts to decide. And finally, no estate plan could potentially result in missed opportunities for tax planning.
Speak With an Estate Attorney
Leaving a legacy for family and friends is an important task that should not be left to the arbitrary laws of the state. An estate plan puts the control of your legacy firmly into your hands, and the Atlanta law firm of MendenFreiman is here to help you shape this plan. We have the experience to customize your needs and wants into lasting financial security for loved ones. Contact us today to schedule an appointment.