Dying Without a Will in North Carolina
To the chagrin of estate planners across the country, dying without a will (also called dying “intestate”) is a common occurrence in the United States. It’s estimated that roughly two thirds of American adults do not have a will. Making up this figure are people from all walks of life, consisting of all ages, incomes, and levels of education. Sadly, many of these people still won’t have wills by the time they pass away.
So, what happens to these people? Well, if they live in North Carolina, the state’s laws on intestate succession (the “Intestate Succession Act” or the “Act”) will provide these people with a sort of default estate plan. The Act is the state legislature’s attempt to provide a one-size-fits-all solution for all of the individuals who die intestate in North Carolina, regardless of their wealth, age, family circumstances, or anything else that might set them apart from one another. While there are some people who may find their outcomes under the Act acceptable, I’d wager that there are many more who would be extremely dissatisfied with what the Intestate Succession Act has in store for them if they die without a will.
In this blog post, I’ll give a few examples of the Act in action. While the purpose of this post is not to make readers into experts on the workings of the Act (and readers should not try to make inferences about their own outcomes under the Act based on the examples below), these examples should be sufficient to illustrate the kinds of unpleasant surprises that might await those who fail to take their estate planning into their own hands. If you’re interested in working with an attorney to create your own personalized estate plan, I invite you to get in touch to schedule a free consultation.
Example 1: Wanda, a widow, owns her home. She has three adult children: Adam, Bruce, and Carl. Carl is no longer living, and he is survived by three adult children of his own. If Wanda dies without a will, the Intestate Succession Act will divide the home into three equal shares – one for Adam, one for Bruce, and because Carl has surviving lineal descendants, one share for Carl which will be divided among Carl’s children. That means Wanda’s home will be owned by five different people: one third by Adam, one third by Bruce, and one ninth by each of Carl’s three children. These five people (who may be on good or bad terms with one another, may have different financial circumstances, and may have conflicting ideas about dealing with the house) will have to work together to find a mutually acceptable way to manage or sell the property.
Example 2: Mike and Rachel are newly married and do not have children. They live in a house Mike purchased before he and Rachel were married, and the deed has not been updated to include Rachel as a joint tenant with right of survivorship or a tenant by the entirety. Mike dies unexpectedly and without a will. Mike’s parents are still living. While Mike would have wanted his house to go to Rachel, who would like to continue using it as her primary residence, the Intestate Succession Act gives Rachel a one-half interest in the house and gives the other half to Mike’s parents. Until some sort of resolution is reached, Rachel will co-own the house with her deceased spouse’s parents.
Example 3: James and Sarah have two teenage children. The couple owns their home as tenants by the entirety, but the rest of their assets are held in separate accounts. Sarah becomes ill and dies before she is able to execute a will. Fortunately, because she and James owned their house as tenants by the entirety, James will become the sole owner of their house upon Sarah’s death. But what about the rest of Sarah’s assets? The Intestate Succession Act gives James $60,000 worth of Sarah’s personal property plus one third of the balance of her personal property. The rest of Sarah’s assets are split between the two teenage children. Because the children are minors, James will hold their portions of Sarah’s assets until they reach the age of majority, at which point they will receive their shares of the assets outright. Had Sarah left a will, she might have opted to leave 100% of her assets to her husband James. If she did choose to leave any amount to her children, she would have had the option to keep the kids’ shares in trusts for their benefit until they were a bit further along in years — maybe twenty-five or thirty years old.
Example 4: Tom and Jane have been in a relationship for many years, but they are not married. Tom dies in an accident. He has not executed a will. Because Tom and Jane were not married, the Intestate Succession Act makes no provision for Jane. If she receives anything as a result of Tom’s death, it will be by beneficiary designation, right of survivorship, or some other means of transfer outside of Tom’s estate (which Tom may or may not have had the foresight to establish for Jane’s benefit). The rest of Tom’s assets will be distributed to his parents or other surviving relatives in accordance with the Act.
These examples illustrate just a few possible bad outcomes under the Intestate Succession Act. All of these examples deal with property being distributed in an undesirable way, but having a will is about more than just distributing property to chosen beneficiaries. For example, a person who executes a will gets to designate who will be in charge of paying their debts and distributing their assets (their Executor). Parents who execute wills get to name guardians for their minor children in the event both parents pass away before the children turn eighteen. A well-crafted estate plan can also include provisions meant to reduce estate tax liability or preserve a beneficiary’s access to public benefits. None of these things are considered under the Intestate Succession Act.
The bottom line is this: a one-size-fits-all estate plan actually fits pretty poorly. Instead of accepting the state legislature’s default estate plan, consider speaking with an estate planning attorney about how to best provide for your intended beneficiaries after your death. If you would like to schedule a free consultation to discuss your estate planning goals, I invite you to give me a call or send me an email. It would be my pleasure to assist you.
The information contained in this blog post is intended only as general legal information and should not be construed as formal legal advice on any matter, nor should its presentation be construed as intent on the part of The Law Office of Ryan A. Layton, PLLC to form an attorney-client relationship with any user of this website. For more information, please see this disclaimer.