Estate planning is often a task that people put off or overlook entirely. Yet, failing to plan for the distribution of assets can lead to significant complications and unintended consequences for loved ones left behind. Intestate succession, the legal process that governs the distribution of assets when someone passes away without a valid Last Will and Testament (or trust agreement), can result in outcomes that may not align with your wishes. To help you avoid such outcomes, the Los Angeles attorneys at Schomer Estate & Wealth Advisors discuss 10 mistakes that can result in leaving behind an intestate estate.
- Failure to Draft a Will: Perhaps the gravest error one can make in estate planning is neglecting to draft and execute a Last Will and Testament. Without this essential document, state laws, known as intestacy laws, determine how assets are distributed. This can result in assets going to unintended beneficiaries or even being claimed by the state.
- Assuming Assets Automatically Transfer: Many individuals erroneously believe that their assets will automatically transfer to their spouse or children upon their death. Without a legally valid Will, however, this assumption may not hold true, particularly in cases involving blended families, former marriages, or complex familial relationships.
- Not Updating Beneficiary Designations: Over time, circumstances change, yet individuals often forget to update beneficiary designations on assets like retirement accounts, life insurance policies, and bank accounts. Failing to keep these designations current can lead to assets being inherited by unintended beneficiaries or, in some cases, bypassing the estate entirely.
- Ignoring Estate Planning for Minor Children: Your minor child cannot legally inherit directly from your estate. If you leave assets to your minor child in your Will, it creates a problem because an adult must manage those assets until the child becomes an adult. The confusion over those assets can result in assets that are unaccounted for, creating an intestate estate.
- Overlooking Digital Assets: In today’s digital age, many people accumulate significant digital assets, such as social media accounts, cryptocurrencies, and online banking accounts. These assets are often overlooked in estate planning, making it difficult for loved ones to access or manage them without clear instructions – and creating an intestate estate.
- Not Considering Tax Implications: Without the opportunity to implement tax-saving strategies, such as trusts or lifetime gifts, a significant portion of the estate may be lost to taxes, reducing the inheritance for beneficiaries. That, in turn, can also result in an inability to follow the intended distribution of your estate assets, leaving some assets as intestate assets.
- Ignoring Business Ownership: Business owners must plan for the succession of their business interests to ensure continuity and avoid disputes among heirs. Without a clear plan in place, the business may face challenges regarding ownership and management, potentially jeopardizing its viability. If your business assets are not accounted for within a comprehensive estate plan, they could form an intestate estate upon your death.
- Failure to Account for Debts and Liabilities: Estate planning involves not only the distribution of assets but also the settlement of debts and liabilities. Creditors must be paid from the estate before assets can be distributed to beneficiaries. Assuming that debts will be paid or forgotten can wreak havoc with your estate and potentially leave assets out of your Will or trust.
- Disregarding Family Dynamics: If you fail to consider the likelihood of conflicts and resentment among family members based on the terms of your estate plan, the likelihood of litigation increases. If the Will that you executed is successfully challenged, your entire estate may revert to an intestate estate.
- Not Seeking Professional Guidance: DIY estate planning or relying on outdated or incomplete information can lead to costly mistakes, including the failure to distribute your entire estate. That means you will unintentionally leave behind an intestate estate. Consulting with an experienced estate planning attorney ensures that documents are legally sound and tailored to individual circumstances, preventing an unintentional intestate estate after your death.
Do You Need Help Ensuring that You Do Not Leave Behind an Intestate Estate?
For more information, please join us for an upcoming FREE seminar. If you have questions or concerns about how to prevent leaving behind an intestate estate contact the experienced Los Angeles estate planning attorneys at Schomer Estate & Wealth Advisors by calling (310) 337-7696 to schedule an appointment.
A graduate of Boston University School of Law, Scott P. Schomer is a frequent lecturer on estate planning and elder law issues, having discussed these important issues on local and national television. A seasoned courtroom advocate, Scott has obtained combined judgments and verdicts in excess of twenty-five million dollars for his clients. Read More!
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