If you pass away without an estate plan in place, the laws of the state where you reside at the time of your death determine the distribution of your assets among your spouse, children, parents, and in some cases, other closest living relatives. State laws attempt to predict how you would want your assets divided among these individuals, but this may not always align with your true wishes. Contrary to a common misconception, many married couples believe that their spouse will automatically inherit everything if there is no plan in place, which is not always the case. In the event of your passing, several scenarios may unfold:
- If you are married with no children but have surviving parents, your parents may also be entitled to a portion of your estate.
- If you pass away leaving a spouse and children, whether you and your spouse share all children will impact how much your spouse receives.
- If you have children with someone other than your spouse your spouse may receive less of your estate.
- If you are unmarried, you have not had any children, and you have no living parents, your assets will be divided among your closest living relatives.
While these legal relationships may not always align with your preferred asset distribution, existing estate planning measures can counteract these default rules. For instance, if you have designated beneficiaries for retirement accounts or life insurance policies, those assets will be distributed to the named beneficiaries outside of the probate process.
If you lack a comprehensive plan, your state’s laws of intestate succession determine the individual responsible for administering your estate. In Michigan, this person is known as a personal representative, while other states may refer to them as an executor. The personal representative initiates probate by filing necessary documents with the probate court, locates all your assets, settles outstanding debts, pays owed taxes, and eventually distributes your assets according to state law specifications.