The Many Downsides of Intestacy law
As we already mentioned, intestacy statutes divide property based solely on the deceased’s familial relationship to heirs. The rules do not take the decedent’s unique personal situation into account—the varying needs of family members, the desire to give to friends or charities, the wish to minimize taxes and administration costs, and so on. As you can imagine, this distribution formula is almost never what the decedent would have wanted.
Let’s look at some examples that illustrate the many downsides to dying intestate:
- The spouse may not get enough. Roger and his wife Diane have two minor children. Roger died without a will. Diane is shocked to learn that under her state’s intestacy laws, she only receives one-third of the probate property, with each of the children also getting one-third.
- The court will appoint an administrator. If Roger had made a will, he could have carefully selected an executor to oversee his estate—someone trustworthy and capable. Instead, in the absence of a will, the court will appoint an administrator—likely not someone Roger would have chosen.
- The estate may shrink because of fees and loss of value. Diane is also surprised and exasperated by how difficult the estate administration is. The administrator has only the minimum powers granted by law, not the broader powers Roger could have granted under a will. Therefore, the administrator has less flexibility in dealing with the estate assets—especially Roger’s business. Not only does Diane pay higher fees because of the increased difficulty and the additional time required to administer the estate without a will, but the administrator’s lack of flexibility results in the forced sale of estate assets at liquidation prices, leading to a loss of value for the estate.
- No consideration of special needs. Lydia, a widow, leaves behind two boys—one with Down syndrome. Intestacy laws treat children equally despite their very unequal needs. Lydia lost the opportunity to provide extra money for her child with special needs when she failed to make a will. She also lost the chance to choose a guardian for her son with special needs.
- No distribution of specific assets to specific recipients. Since Lydia never had any girls, she wanted to give her favorite ring (a valuable family heirloom) to her niece, Janice. However, this type of specific bequest can only be achieved with a will—state intestacy laws do not recognize her intentions.
- Without heirs, the state keeps the assets. John died without heirs (as defined by the state intestacy statutes). He had spent his time building and growing his business, doing charity work that was very important to him, and socializing with a large group of friends, two of whom were like brothers to him. John didn’t bother with a will because he didn’t have a family. However, in ignoring estate planning, he lost the opportunity to leave his substantial estate to his closest friends and the charity that was so meaningful to him. Instead, the state paid his debts and expenses and waited for any heirs to turn up. When none did, his entire estate passed to the state.
This brings us to a final point about wills and estate planning in general: It’s not only important for clients to create estate planning documents, it’s equally vital for them to let a family member, attorney, or executor know that these documents exist and where to locate them when the time comes!
Other Legal Elements of an Estate Plan
Although a will is a critical legal element of an estate plan, a business owner will want to give serious consideration to these additional items as well:
- A durable power of attorney authorizing another individual to handle the business owner’s financial affairs if the owner becomes incapacitated
- A healthcare power of attorney authorizing another person to speak for the business owner on healthcare matters if the owner is incapacitated
- A living will giving instructions to healthcare providers about the business owner’s preferences as to end-of-life care and extraordinary medical measures to extend life
At Islamic Wills Trust Services we have a team of experienced attorneys who can help you set up an Islamic living trust tailored to your unique needs and circumstances. Contact us today to learn more about how we can assist you in protecting your assets for generations to come.
Schedule your free consultation in our offices in Maryland and Virginia in your house or online. We’re also available to meet on weekends and after working hours. You may schedule your consultation by calling us at 855-559-4557 or by emailing us at firstname.lastname@example.org. Appointments are typically scheduled two weeks in advance.