Intestacy – dying without a Will – is a little more complicated for USA as the rules also depend upon the state that you hold assets in.
If individuals die intestate, their state’s intestacy laws will make assumptions about how they would want to leave their property. Some of these assumptions may be correct, and others may result in the distribution of property in a manner far different from the deceased’s wishes. Although the intestacy laws will determine who will inherit the property (heirs) and in what shares, the statutes do not determine who will receive specific items of property. For example, the law may state that the two children, a daughter and a son, will each take one half of the estate, but it will not specify that the daughter should receive a particular ring and the son should receive a particular antique desk.
Typical Intestacy Distribution Methods
- Where the Intestate Decedent is Married but has no Children. If the intestate decedent is married but has no children most states distribute between one-third to one-half of the estate to the surviving spouse. Anything remaining generally goes to the decedent’s surviving parent or parents. If both of the decedent’s parents are dead, many state intestate statutes provide that the remaining property be distributed among the decedent’s surviving brothers and sisters.
- If the Intestate Decedent is Married and has Children. If the intestate decedent is married and has children most intestacy statutes distribute just one-third to one-half of the decedent’s property to the surviving spouse. The remainder is divided among the decedent’s surviving children, regardless of their ages.
- If the Intestate Decedent is a Single Person with Children. If the intestate decedent is a single person with children, state intestacy laws provide that the entire estate will be distributed equally among the children, regardless of their ages or circumstances. For example, an adult child will receive the same amount as a minor child, and a wealthy child will take the same share as a child living under more modest circumstances. The only determining factor is the blood relation to the decedent. Most states also make no distinction between siblings of whole blood and siblings of half-blood. Thus, in a case where a decedent has children from two marriages, each child from both marriages will take an equal share of the decedent’s estate. Likewise, intestacy laws in all states treat legally adopted children the same as full-blooded relations of the decedent. The laws may differ significantly with respect to the decedent’s step-children and illegitimate children.
- If the Intestate Decedent is a Single Person with no Children. If the intestate decedent is a single person with no children most state intestacy laws favour the decedents parent(s) in the distribution of his/her property. If both parents predecease the decedent, many states divide the property among the decedent’s surviving brothers and sisters.
Intestacy laws that distribute property to surviving children and other relatives use various formulas to divide the property. In a state that employs a “per capita” method, the heirs receive equal shares. For example, if there are eleven heirs of a decedent who dies intestate, each will receive one-eleventh of the decedent’s estate.
Other states have more complicated schemes that determine the amount of an heir’s share according to the degree of relationship to the decedent. For example, if the decedent has two adult children one of which is dead with two surviving children of his own (the decedent’s grandchildren), the decedent’s surviving adult child would take one half of the estate and the decedent’s two grandchildren would share their deceased parent’s half share, each taking one-quarter of the estate. This is known as “per stirpes” distribution, where each branch of the family gets an equal share.
If the intestate decedent has no living spouse, children, parents, or siblings, intestacy laws provide mechanisms to determine other blood relatives qualified to take the estate. Overall, there is a strong statutory preference to distribute the decedent’s property to heirs, regardless of how remote they may be to the decedent. However, in those rare cases where no living heir can be located, then the decedent’s estate will escheat to the state, that is, the state takes ownership of the decedent’s property.
For Canada, dying intestate will depend upon the province in which assets are held. Jurisdictions differ on points of detail and rare is the jurisdiction that does not have a specific statute that sets out the distribution of the estate in the event that a deceased did not leave a will. Those statutes are sometimes stand-alone statutes known by such self-explanatory names as Nova Scotia, Saskatchewan or Manitoba.
On other occasions, the intestacy provisions are couched inside of more comprehensive probate statutes. This is the case in British Columbia, for example, where that jurisdiction attempts to codify estate administration law. In Alberta, the Wills and Succession Act consolidates not only the requirements of a valid will, but also provides for the distribution in the event of intestacy. In Ontario, the relevant statute is known as the Succession Law Reform Act.
Each jurisdiction is different in points of detail but the general scheme seems to be the first take care of the spouse. She or he normally inherit a first guaranteed share, in some cases the entirety of the estate if there are no children or other lineal descendants.
If there is a spouse and lineal descendants, the spouse would typically take a specified portion of the estate (eg. a third), and the residue would be split between the children then living or their next of kin in equal shares per stirpes.
If neither spouse nor issue survived the intestate, the estate would then normally go to the parents of the deceased.
At the bottom of the pecking order would be brothers and sisters of the deceased-intestate who would then inherit the entirety of the estate. This, of course, assuming that there is no surviving spouse, children or lineal descendants, or parents that survive the intestate.
Further down the food chain are nephews and nieces.
Still further, and again assuming that there are no survivors from amongst the above groups, a formula is provided to distribute the estate equally amongst blood relatives of the same degree of kinship.
Some of the emerging issues in this field of estate law include the definition of the spouse which no longer requires a marriage but would include a marriage like relationship with the intestate for at least two years. Same-sex relationships also present novel issues in this area of law.
Some jurisdictions such as British Columbia not only give a spouse a priority share of the intestate's estate, but also give her a life estate in the matrimonial home, and she/he gets all "household furnishings" (§96(2), Estate Administration Act).
Dying without a will leaves distribution to the strict formula set by the government and in most cases, not how we want our assets distributed.
Also, dying without a Will for your heirs can be extremely troublesome if you hold assets overseas. USA and Canada alone have different rules per state or province so it is important for us to consider where our assets are and how we want these distributed if we are no longer around.
Next week - Part 4 : Hong Kong and Asia
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