Online Will Blog

The Foundation: Wills vs. Intestacy

The most fundamental aspect of inheritance law is the difference between dying with a valid will (testate) and without one (intestate). Many seniors mistakenly believe that their wishes will automatically be honored or that their assets will naturally flow to their spouse or children.

When you die intestate, your state's inheritance laws determine who receives your assets, following a predetermined formula that may not align with your wishes. These intestacy laws vary significantly by location, creating potential complications for beneficiaries and possible distributions that contradict your actual intentions.

Creating a valid last will and testament allows you to specify exactly how your assets should be distributed, name guardians for minor children or dependents, and potentially minimize estate taxes. Without this crucial document, the probate court makes these decisions based on state law, not personal preference.

Understanding Probate and How to Navigate It

Probate is the legal process through which a deceased person's estate is properly distributed to heirs and designated beneficiaries and any debt owed to creditors is paid off. For many seniors, understanding the probate process helps shape their estate planning strategy.

The probate process typically includes:

• Validating the will (if one exists)
• Identifying and inventorying the deceased's property
• Having property appraised
• Paying debts and taxes
• Distributing remaining property as directed by the will or state law

Probate can be time-consuming, expensive, and public. Many seniors actively plan to minimize assets that must pass through probate using tools like:

• Revocable living trusts
• Joint ownership with rights of survivorship
• Beneficiary designations on financial accounts and insurance policies
• Transfer-on-death arrangements for certain assets

Evaheld offers comprehensive planning tools that help seniors understand which assets will undergo probate and develop strategies to streamline the process for their loved ones.

State-Specific Inheritance Laws

Inheritance laws vary significantly from state to state, making geographic considerations crucial in estate planning. These variations affect everything from the validity requirements for wills to inheritance tax obligations and spousal rights.

For example, residents of community property states (including Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin) face different asset division rules than those in common law states. In community property states, spouses automatically own a half-interest in most property acquired during marriage.

If you've moved to a new state, it's essential to review and potentially update your estate planning documents to ensure they comply with local laws. Consulting with an estate planning attorney familiar with your state's specific regulations is often worthwhile.

Inheritance Taxes and Estate Taxes

Many seniors worry about tax implications for their heirs. Understanding the difference between estate taxes (paid by the estate before distribution) and inheritance taxes (paid by beneficiaries after receiving assets) is critical for effective planning.

Currently, the federal estate tax exemption is quite high ($12.92 million per individual in 2023), meaning most estates won't owe federal estate tax. However, some states impose their own estate or inheritance taxes with much lower thresholds.

Strategies to minimize tax impacts might include:

• Gifting assets during your lifetime
• Setting up certain types of trusts
• Charitable giving
• Life insurance arrangements

Evaheld's planning resources help seniors understand potential tax implications and develop strategies that maximize what they can leave to loved ones.

Rights of Spouses and Children

One area of inheritance law that often surprises seniors involves the rights of spouses and children to claim portions of an estate, sometimes even against the explicit terms of a will.

Most states have "elective share" laws that prevent a spouse from being completely disinherited. These laws typically allow a surviving spouse to claim a portion of the deceased spouse's estate regardless of what the will states.

The rights of children vary more widely by state. In most states, parents can disinherit adult children if they explicitly state this intention in their will. However, minor children often have certain protections, and some states provide adult children with rights to challenge a will under specific circumstances.

Special Considerations: Blended Families and Non-Traditional Relationships

For seniors in blended families or non-traditional relationships, inheritance planning requires special attention. Without careful planning, children from previous marriages might be unintentionally disinherited, or unmarried partners might receive nothing.

Studies show that blended families face unique estate planning challenges that require tailored solutions. These might include:

• Creating separate shares for different branches of the family
• Using trusts to provide for a current spouse while preserving assets for children from previous relationships
• Clearly documenting intentions regarding non-legally-recognized relationships

The team at Evaheld specializes in helping families navigate these complex situations, ensuring everyone you care about is provided for according to your wishes.

Digital Assets and Inheritance

As our lives become increasingly digital, inheritance law is evolving to address digital assets. From online banking and investment accounts to social media profiles and digital collections, these assets require specific planning.

Many states have adopted the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), which provides a framework for handling digital assets after death. However, platform-specific policies often create complications.

Consider creating a digital estate plan that includes:

• An inventory of digital assets
• Access information for important accounts
• Instructions for what should happen to each digital asset
• Legal documentation authorizing specific individuals to access and manage these assets

Evaheld provides specialized tools for documenting and managing digital legacy planning alongside traditional estate planning.

Conclusion

Understanding inheritance law isn't merely a legal exercise—it's an act of care for those you'll eventually leave behind. By familiarizing yourself with the basics of inheritance law and working with qualified professionals to create a comprehensive estate plan, you can ensure your wishes are honored and your loved ones are protected.

Remember that inheritance planning is not a one-time event but rather an ongoing process that should be reviewed periodically, especially after major life changes like marriages, divorces, births, deaths, moves to new states, or significant changes in financial circumstances.

With thoughtful planning through platforms like Evaheld, you can create an inheritance plan that truly reflects your wishes and values, providing both material support and meaningful legacy to the next generation.