Did You Know the State Has Already Given You an Estate Plan?

There are many misconceptions about what would happen with your assets if you died without a will. Some married couples think their spouse would get all their assets. Some think their spouse would only get something called an “elective share”, which is an amount that changes depending on how long you were married. Both assumptions are incorrect. In this post, we want to discuss how, for those without a will, the state has already given you an estate plan.

If you are married, your real estate and your personal property will be treated differently.

As to real property, then the following is the estate plan the state gives you:
· If you have a child, then ½ to the child and ½ to the spouse;
· If you have more than one child, then ½ to the children and ½ to the spouse;
· If you have no children, but your parents are alive, then ½ to your parents and ½ to your spouse;
· If you have no living parents and no children, then your spouse gets it all.

As to personal property, then the following is the estate plan the state gives you:
· If you have one child, the spouse gets the first $60,000 plus ½ of the remaining assets and the child gets the other ½;
· If you have more than one child, then the spouse gets the first $60,000 plus 1/3 of the remaining assets with the other 2/3 of the assets going to the children;
· If you have no children, but your parents are alive, the spouse gets the first $100,000 plus ½ of the remaining assets with the parents receiving the other ½ of the assets;
· If you have no living parents or children, then the spouse gets it all.

If you are not married, your real property and personal property are treated the same. This is the estate plan the state gives you for your assets in that situation:
· If you have children, they split your estate equally;
· If you have no children, but your parents are alive, they split your estate equally;
· If you have no children, and your parents are not living, then your siblings will split your estate equally;
· If you have no children, no parents, and no siblings, ½ will go to your father’s parents (your paternal grandparents) and ½ will go to your mother’s parents (your maternal grandparents). If your grandparents are not alive, then it will go to uncles and aunts;
· If you have no children, parents, siblings, grandparents, uncles, aunts, nieces or nephews, then the estate will go to the state of North Carolina.

One caveat is that if one of the above persons dies before you, and they have descendants, then his or her descendants will take the share.

Let’s work through one scenario.

Tom and Sue are married and they have four children: Abel, Brian, Cain, and Delilah. Abel died (under mysterious circumstances) before Tom and Sue, leaving three children: Ephraim, Francis, and Ginny. In this situation, upon Tom’s death, 1/2 of his real estate would go to his wife, Sue, and ½ would be split between the children, with grandchildren Ephraim, Francis, and Ginny splitting what Cain would have received. So, Brian, Cain, and Delilah would receive 1/8 of the real estate while Ephraim, Francis, and Ginny would each receive 1/24 of the real property because they would split equally the 1/8 share that would have gone to Abel if he had survived Tom.

As to the personal property, Sue gets the first $60,000 plus 1/3 of any remaining personal property. Brian, Cain and Delilah get 1/6 of the remaining personal property and Ephraim, Francis and Ginny would each receive 1/18 of the personal property.

Lastly, the above only pertains to assets that do not have beneficiary designations. In other words, if you have a bank account, a brokerage account, a life insurance policy, or a retirement account, and if that account has beneficiaries, then the funds in that account will pass to those beneficiaries and not according to the outline above.

For many people who do not have a will, they functionally have two estate plans—the ones they have through their beneficiary designations and the one the state gives them for everything else.

If all of this is confusing (and it is), this is one of the many reasons why everyone should have either a will or a trust in place so that you can make sure you know how your assets are distributed after your death. You should not rely on the estate plan the state gives you. Contact Strauss Attorneys PLLC to schedule an appointment to discuss your estate planning needs. Your family members will be glad you did.