In the unfortunate event of your passing without an effective estate plan, which is commonly referred to as dying “intestate,” your loved ones may encounter significant complications.
Dying intestate often leads to complexities regarding personal assets, such as real estate, valuable possessions like jewelry, furniture, and artwork, as well as financial assets like bank and retirement accounts, life insurance proceeds, and other valuables. This situation can frequently trigger family disputes and unnecessary conflicts during a period of mourning, and in some cases, these disputes may persist for years.
What is “intestate?”
When someone passes away without an estate plan, it is termed dying intestate. In Michigan, the term refers to any portion of a deceased individual’s estate that lacks specific distribution instructions through a will or other estate planning document. This portion of the estate is then transferred through intestate succession to a decedent’s surviving spouse and heirs as defined in Michigan law. Although someone may have an estate plan, if the plan fails to distribute all their property, the decedent is considered to have died intestate with respect to the property that is left out of the estate plan.
For example, let’s consider the case of Abe. In 2012, Abe established an estate plan. In 2014, Abe’s brother Bob passed away, leaving his house to Abe. Regrettably, Abe’s estate plan did not include provisions for the distribution of any real estate, and Abe never updated his estate plan to account for his inheritance from Bob. Consequently, upon Abe’s passing, his estate will be distributed according to the provisions in his existing estate plan. However, Bob’s house, which was not addressed in his estate plan, will be subject to distribution through intestate succession, as outlined by Michigan law.
How is the intestate estate distributed?
The distribution of the intestate estate begins with the surviving spouse. The amount that the surviving spouse receives primarily depends on whether the decedent had any surviving descendants (i.e., children, grandchildren) and whether those descendants are also descendants of the surviving spouse.
In another example, assume that Abe married Lolita. Abe had four children while Lolita had two children, both from previous marriages. No adoptions occurred. Abe passed away in 2020 without a will, then Lolita would be entitled to the first $100,000, plus half of the remaining balance of Abe’s estate because none of Abe’s children are also Lolita’s children.
But what happens to the rest of Abe’s estate?
Once the surviving spouse receives their share, if there is a surviving spouse, then any portion of the undistributed intestate estate is distributed following a “down, up, out” pattern. First, distributions are made (down) to the decedent’s descendants. If there are no descendants, then the estate is distributed (up) to the decedent’s parents, or grandparents if the decedent’s parents have both died. If the decedent left no descendants and was predeceased by both parents and grandparents, the remaining intestate estate is distributed to (out) and shared among the decedent’s siblings.
What does a well-structured estate plan do?
A well-structured estate plan can streamline asset distribution without the need for probate court involvement, saving your loved ones both time and money. The probate process in Michigan typically ranges from six months to a year or more for straightforward cases, while complex cases can take even longer. Moreover, the expenses associated with probate, including court fees, attorney fees, personal representative fees, and miscellaneous costs, can be significantly reduced or eliminated through the implementation of an effective estate plan.
Nevertheless, a well-structured estate plan goes beyond managing assets; it also reflects your wishes upon your passing. An estate plan prepared by an experienced Michigan estate planning attorney is the best way to ensure that you have created an enforceable estate plan that safeguards your wishes.
Furthermore, it is equally important to safeguard your Will. We recommend that our clients file their original Will with the Probate Court in the county where they reside. Alternatively, people could keep their original Will with their attorney, or in a safe place of their choosing.
Contact Michigan Trust & Estate Planning to assist you in creating an estate plan that protects both you and your family.