I get calls almost weekly from people inquiring about the necessity of a will. It is often when a loved one is in the hospital or transitioning to hospice and the family is in a panic to make sure a will is in place. During these phone calls I do my best to understand the family situation and how the client would want their assets to be distributed. And while every case is different and there are lots of factors that go into my advice, there are certain situations where I tell people a will isn’t necessary.
So, What Happens When Someone Dies Without a Will?
The first thing I always advise people is that assets with beneficiaries are not subject to the will or the laws of intestacy (dying without a will). When an individual signs a beneficiary designation form, whether it be with their bank, an investment firm, a life insurance company, etc., that person is essentially signing a contract. Under the law that contract is separate from the will, and, with few exceptions, the assets will transfer directly to the person named on the form regardless of what their will says.
For example, if my will says I leave everything I own at my death to my spouse then everything without a beneficiary would go to them. However, if I have a bank account which names my sister as beneficiary, the contents of that account are going to transfer directly to my sister, without the need for probate.
This brings me to the second important aspect of having beneficiaries on financial accounts, the assets held in those accounts will transfer directly to the beneficiaries without the need to open a probate estate. Assets passing under a will, or the laws of intestacy, are generally required to be probated through the probate court before they can be distributed to the beneficiaries/heirs. This is why it is so important to review your beneficiary designations with your financial institutions to make sure they are set up correctly and that the people you want will receive your assets upon your death.
How Are Assets Divided When There is No Will and No Beneficiary?
When a decedent fails to put down their wishes in writing, the law steps in with rules of how assets are to be divided. This is called dying intestate and sometimes, if the client is in agreement with those distribution laws, a will won’t be necessary. Below is MCL 700.2102 which describes how assets are divided if the decedent left a surviving spouse.
The entire intestate estate passes to the surviving spouse if the decedent passes away with no surviving descendants and no surviving parents.
- The first $150,000.00* plus 1/2 of the balance of the intestate estate will pass to the surviving spouse, if all the decedent’s surviving descendants are also descendants of the surviving spouse and there is no other descendant of the surviving spouse who survives the decedent.
- The first $150,000.00* plus 3/4 of any balance of the intestate estate will pass to the surviving spouse, if no descendants survive the decedent, but a parent of the decedent survives.
- The first $150,000.00* plus 1/2 of the balance of the intestate estate will pass to the surviving spouse, if all the decedents of the surviving spouse are also descendants of the surviving spouse and the surviving spouse has 1 or more surviving descendants who are not descendants of the decedent.
- The first $150,000.00* plus 1/2 of any balance of the intestate estate will pass to the surviving spouse, if 1 or more, but not all, of the decedent’s surviving descendants are not descendants of the surviving spouse.
- The first $100,000.00* plus 1/2 of any balance of the intestate estate will pass to the surviving spouse, if none of the decedent’s surviving descendants are descendants of the surviving spouse.
Below is MCL 700.2103 which describes how assets are divided if the decedent did not leave a surviving spouse.
- The entire intestate estate passes in the following order if there is no surviving spouse to the following individuals who survive the decedent:
- The decedent’s descendants by representation (i.e. per stirpes).
- If there is no surviving descendant, the decedent’s biological parents equally if both survive, or to the surviving parent.
- If there is no surviving descendant or parent, the descendants of the decedent’s parents or of either of them by representation (i.e. biological siblings of the deceased).
- If there is no surviving descendant, parent, or descendant of a parent, but the decedent is survived by 1 or more grandparents or descendants of grandparents, 1/2 of the estate passes to the decedent’s paternal grandparents equally if both survive, or to the descendants of the decedent’s paternal grandparents or either of them if both are deceased, the descendants taking by representation; and the other 1/2 passes to the decedent’s maternal relatives in the same manner. If there is no surviving grandparent or descendant of a grandparent on either the paternal or the maternal side, the entire estate passes to the decedent’s relatives on the other side in the same manner as the first 1/2.
* Numbers are adjusted yearly for inflation.
Let’s look at some examples so we can apply the above laws to real life situations.
- Abby is a single mother who is 79. She has 3 adult children all of which get along, and no deceased children. It is her wish that her assets be evenly divided among her 3 children, and she knows they will work together to accomplish that.
In this situation the law says that her assets would be divided the way she wants, regardless of whether she has a will or not. In this situation a will may not be necessary.
- Carlos is married at the time of his death to his second wife, Sharron. Carlos has 2 children from his first marriage. He and Sharron did not have any children together.
In this scenario we look to MCL 700.2102 because Carlos has left a surviving spouse. He has also left surviving children (descendants) but those children are not Sharron’s children. Under MCL 700.2102(f) we see that in this case Sharron would inherit the first $100,000 of Carlos’s intestate estate then she and Carlos’ 2 children would divide whatever remained.
Whether a will is necessary will always depend on the circumstances, the individuals involved, and the assets in question. If you are curious about whether you should set up a will, please give us a call for a free, honest legal opinion.