It is estimated that there are over 330 Million people in the United States right now and most of them will die without a Will or Trust. If you don’t do your estate planning, the State of Arizona will plan for you using the Law of Intestacy, which is the default inheritance plan in Arizona.
Law of Intestacy
The Law of Intestacy is the law which tells beneficiaries who is entitled to the deceased person’s assets upon death. In Arizona the statute can be found at ARS 14-2102 and 2103. No one likes these rules. But the State needs to have a way to distribute the deceased person’s assets when they don’t do their homework.
If you do your estate plan, even a simple Will done properly, you will decide who will inherit your assets. You will also decide who manages the process of transferring your assets to your heirs. You will be in the driver’s seat. If you don’t your estate plan, when you die, there has to be a way to decide these things. That is left to the legislature.
I don’t want the legislature to decide how to transfer my assets to my family. I have done my estate plan, so I am not worried. Do you want the legislature to decide what you need for your family? I think not.
Let’s say you are married, and you want your spouse to received everything at your death. If you don’t plan properly, ARS 14-2102 says everything goes ½ to your spouse and ½ to your children from a prior marriage. Is this how you want your assets to pass?
Let’s say you are not married, but you have children. ARS 14-2103 says everything will be divided equally between your children. But what if you want your vehicle to go to Child A, and your house to go to Child B? Unless you do your own Will or Trust that says that, most likely the vehicle and house will be sold and the proceeds divided equally between your children.
This is how the Law of Intestacy works. It is not want you want to do, it is what the legislature tells your children must happen. Is this how you want your assets to pass?
Other Miscellaneous Relatives
So now, what if you are not married, and don’t have any children. The Law of Intestacy says the assets pass like this:
- Your parents. If both parents are gone the assets pass to your siblings.
- Your siblings. The assets pass to your siblings, share and share alike. What if you don’t want your Brother B to get anything? Too bad. Brother B must receive his share. If you have no siblings:
- Your nieces and nephews and on and on and on.
Get the picture?
Disabled Family Members
Here are a few more wrinkles. If you don’t do your Will or Trust and you have a family member, like your mom, who is on Medicaid or ALTCS, Arizona Long Term Care there may be a problem. If mom receives part or all of your inheritance the state will find out. If that happens, the disabled family member, if he or she is on Medicaid or ALTCS, will run the risk of losing their benefits. There is also the risk that the state will take the money. Is that what you want to happen?
Assets out of State
More fun and games. So, let’s look at this scenario. Let’s say you die, and you have a home in Arizona and another home outside of the state of Arizona. What does the Law of Intestacy tell us then? Well the state of Arizona will tell your loved ones who gets the assets located in Arizona and how. The assets located outside of Arizona will be subject to the laws of that state.
The laws of each state are not the same. Neither are the Laws of Intestacy. So the Arizona assets will pass one way, and the out of state assets may pass another way. Do you want to be the one to tell your family why the rules are different in Arizona and the other state?
Just in case you haven’t had enough fun, let’s talk about loved ones in prison. Just because you are in prison, doesn’t mean you lose your right to inherit. So far, so good. But, if a prison is notified that a prisoner will receive an inheritance, guess where the money goes?
If you say, to the prisoner of course, you will probably be wrong. The inheritance will probably go to the county in which the prison is located to defray the county’s costs for housing and feeding the prisoner. Does this sound like a good idea to you? (It does if you are the county.)
Like I Said
The Law of Intestacy is there when you don’t do your homework. Every adult needs to have at least a Will if not a Will and a Trust. When you plan you can retain control? If you don’t plan you are letting the wrong people decide where your hard-earned assets will go. Have you done your Will and Trust?