What to Do When a Loved One Dies without a Will
Which one of these three legal situations will you find yourself in when a loved one dies? The answer depends on the type of planning they have done. For the purposes of this article, we will call the deceased loved one, the “Decedent.”
- First, the Decedent died without doing any estate planning.
- Second, the Decedent died with a Will in place.
- Third ,the Decedent died with a Will and a Living Trust in place.
This article focuses solely on what happens when your loved one dies without having done any estate planning.
If the Decedent died without a Will in place and they had considerable assets (over $150,000 as of 2015), then their estate will most likely go through an administrative process known as “probate.” The Decedent is considered to have died “intestate” which simply means, without a Will. The California Superior Court system uses the laws of intestate succession to determine who will inherit the estate. The Court will appoint an administrator and the state law will distribute the Decedent’s stuff (also known as their “assets”). So, if your loved one did not create a Will, the state will do it for them.
Cost of Probate Without a Will
The probate process is extremely costly. Attorney fees are statutory and based on the value of the estate. That means they are set by statute and cannot be negotiated. Further, the value of the estate is not determined with liabilities in mind. For example, if the Decedent owned a home valued at $600,000 with a mortgage of $400,000, the mortgage is ignored for fee purposes. Her attorney fees alone will run somewhere around $15,000. This does not include the court filing fees, publication, bond, and other related costs associated with probating an estate, which can run in the thousands. Here is a breakdown of attorney’s fees based on the value of the estate:
- 4% on the first $100,000
- 3% on the next $100,000
- 2% on the next $800,000
- 1% on the next $9,000,000
In addition to being costly, the process is very lengthy and public. All of the information regarding your loved one’s estate will be accessible by anyone.
Determining who inherits the estate depends on a series of questions. First and foremost, was the Decedent married?
The estate will be split equally between the person’s children if the Decedent was NOT married,. But if the Decedent had no children or issue (grandchildren, great-grandchildren, etc.) living, the estate will be distributed to the Decedent’s parents. If there are no parents, the estate will be distributed among the Decedent’s siblings, if none, then between nieces and nephews, and so on.
if the Decedent was married, we’d have to determine if the asset was community property, separate property, or a combination of both.
Let’s take a moment to define each of these types of assets.
- Community Property is generally defined as assets that are acquired during marriage from earnings or salary.
- Separate Property is generally defined as assets(1) brought into the marriage when the person got married, (2) an inheritance or (3) gifts. Of course, classification for certain assets can change throughout the marriage.
The Decedent’s community property goes to the surviving spouse. Now, if community property was all that was owned, it can easily be transferred to the surviving spouse through what is called a “Spousal Property Petition”, rather than a full-blown probate.
Separate property of the Decedent will be distributed based on who they have left behind.
If for example, the Decedent is survived by a husband and three children, then the husband will receive 1/3 of the separate property and the other 2/3 will be divided between the three children.
If for example, the Decedent is survived by a husband and mother (no children), then the husband will receive ½ of the separate property and mother will receive the other ½.
There are a variety of outcomes with Probate, depending on who survived the Decedent and the types of assets owned by the Decedent. The state takes charge and determines who will receive your assets, even your sister whom you have been estranged from for the past15 years can get a share. The outcome would be different if the Decedent had a Will or Living Trust in place.
To read more about Wills, click here.
To read more about Living Trusts, click here.
Check back next month to read about what happens when a loved one dies with only a Will in place.