Intestacy: Does the State Get My Stuff if I Fail to Make a Will?

If you have a valid Will (and someone knows where to find it), it controls who receives your probate property at your death. But what happens if you die without a Will? I’ve had a lot of people tell me they need to create their Will so that their possessions don’t go to the State. While I can tell you it’s still a good idea to get moving on your Estate Plan, you probably don’t need to worry about the State taking your stuff.

Dying without a Will is known as dying “intestate,” and the state’s intestacy laws determine who has the the right to inherit the assets of the estate. Thankfully, the intestacy statues don’t say that all the assets go to the state. Unfortunately, they often don’t mirror what your wishes would be if you had created a Will, and the probate process can become quite difficult.

When you are trying to determine where your assets would go, the first step is to figure out what will actually become part of your estate. This is the difference between probate property and non-probate property.

What is Probate Property?

In order to understand what probate property is, you need to understand what non-probate property is. Probate is the process of working with the court to administer an estate. Non-probate property, therefore, is all the assets that aren’t administered by the court.

Assets that are jointly owned with rights of survivorship immediately become the property of the surviving owner. This is generally the case with joint bank accounts, and houses owned by a married couple. And assets which have beneficiary designations – such as life insurance, or brokerage and retirement accounts – pass directly to the beneficiary without becoming part of your estate. All of these assets are known as non-probate property.

Probate property, then, is everything left over that does become a part of the estate. If you have any bank accounts or property in just your name, or financial accounts that don’t have a listed beneficiary, they become part of your estate. Often if you have a business or a partnership, you own it in your own name, and not with your spouse. All of these assets are controlled by intestacy laws if you die without a Will.

The Pennsylvania Intestacy Statute

According to Pennsylvania’s intestacy statutes (20 Pa.C.S. § 2101 et seq), who receives your possessions depends on what living relatives you have. The first step is to determine the “spousal share.”

Spousal Share

If you are survived by a spouse, they are entitled to at least some portion of your assets. In the simplest case, if you do not have any living “Issue” (children, grandchildren, etc.) or parents, your spouse is entitled to the entirety of your assets.

However, if you have any surviving children or grandchildren with your spouse, or if you are survived by either of your parents, then they are entitled to some portion of your estate. In that case, your spouse receives only the first $30,000 of your assets, plus one-half of the remainder of the estate. For example, if your estate was worth $1,000,000, your spouse would receive $515,000 ($30,000 + $970,000/2). The rest of the assets would be split between either your Issue or your parents.

If you are survived by Issue who are not related to your spouse, such as children from a previous marriage, then your spouse is only entitled to one-half of the estate. Using the $1,000,000 estate from before, this means they would receive $500,000. The other half then would be split amongst your issue.

Remaining Property

After determining the spousal share, the rest of the assets (or all the assets if there is no surviving spouse) pass to the first group which has someone to receive the assets.

1. Issue

If you have any living descendants, they receive the remainder of your estate. This property passes per stirpes. In short, this means that your children split their share equally, but if you have a predeceased child with living children (your grandchildren), that child’s share would be split amongst the grandchildren.

This means that even if you have minor children who your spouse still takes care of, your children would have the legal right to those assets, not your spouse. This can be a nightmare, as your spouse is legally required to keep those assets separate and account for them. I haven’t met anyone who actually wants their estate to be handled in this way.

If you have step-children, but have not legally adopted them, then they are not entitled to any of these assets, regardless of how close your relationship with them was. And if you have children with someone other than your spouse, there is a host of other problems that you might have.

If you have minor children from a prior relationship, their surviving parent would end up with control of the assets. Even though the children have the legal right to the money, if you don’t trust your Ex, you likely don’t want them to be in control of the money. And if you have an estranged child who you don’t have a relationship with and don’t want to leave an inheritance to, they are still entitled to a portion of the estate.

In all of these cases, we would want to make sure to protect any inheritance passing to minor children, or any child who might not be responsible enough to handle the inheritance yet. In a Will you can set up a Minor’s Trust to set the terms of that money. Intestacy means there are less rigorous protections on that money while they are minors, and no protection at all as soon as they turn 18.

2. Parents

If you have no surviving issue, your surviving parent or parents receive the remainder of your estate. If you only have one surviving parent, they are entitled to the entirety of the remainder. If both of your parents are surviving, they are each entitled to half of the remainder.

There are more complicated issues that could arise to. What if you were raised by one parent, and the other left when you were young, or was never around in the first place? That parent could still try to make a claim on a portion of the estate. Even if a court ultimately decides against awarding them any of the assets, it takes a lot of time, money, and energy to go through that process.

3. Siblings

If you have no surviving parents, the remainder of your estate passes to your siblings, per stirpes.

4. Grandparents

If you have no surviving siblings, nieces, or nephews, then the remainder passes one-half to your paternal grandparents and their issue, and one-half to your maternal grandparents and their issue, per stirpes.

5. Aunts, Uncles, Their Children, and Their Grandchildren

The rule gets exceptionally complicated at this point. If you are not survived by any of your grandparents, the remainder of the estate passes to your aunts and uncles, per stirpes. However, the issue of your cousins (the grandchildren of your aunts and uncles, and the descendant’s of those grandchildren) are not entitled to any share of the estate unless there is no one closer related who is receiving a share.

In other words, if you have cousins who are going to inherit the estate, but one cousin has already passed and left children behind, those children would not be entitled to anything – only the surviving cousins would receive a portion of the estate.

Commonwealth

Finally, only if you are not survived by any of the people listed above do your assets “escheat” to the Commonwealth of Pennsylvania.

Never-ending Probate – An Illustration

Recently I was visiting friends in Virginia, and one of them updated me on the status of his Uncle’s estate, which he had first told me about a year prior. His Uncle had passed, and in his Will he left everything to his sole brother. However, the brother predeceased him, had never created a Will, and had never been married or had any children.

The effect was that the Uncle’s estate was essentially going through Intestacy – and neither he nor his brother had any descendant’s, and their parents weren’t living. Last I heard, the estate was still in probate after 2 years, and there are now over 20 potential beneficiaries claiming a share. I cannot imagine how much it is costing the estate to handle the mess.

Conclusion

The intestacy rules are quite complicated – there are still more special rules and exceptions which I did not touch on. Intestacy almost never mirrors how you would want your assets to pass – most married couples would rather their assets pass entirely to their spouse, which won’t happen unless there are no children or surviving parents.

You also can’t create any protections on the assets passing to your beneficiaries through intestacy. If you have a brother who struggles with addiction, he may suddenly be entitled to receive a large sum of money. In a Will, you could put that money into a Special Needs Trust for his benefit, but without him being able to control it.

To top it all off, probate for intestacy is more complicated, takes more time, costs more money, and is a much larger burden. In certain circumstances, like with my friend’s uncle, there is the possibility of supposed relatives coming out of the woodwork to claim that they deserve a share of the estate.

The best practice is always to have a Will in place as part of your Estate Plan (and stored where it is safe and can be easily found). If you are ready to create your Will and spare your loved ones a lot of trouble, contact a Pennsylvania Estate Planning lawyer today.