The untimely passing of Prince, and the subsequent headlines noting that the artist did not have a will, have left many people asking, “What happens if a loved one (or I) dies, but doesn’t have a will, trust or estate plan in place?” It’s an important question to ask.
Wills, trusts and estate plans are legal documents that define how you want your assets transferred upon death and allow you to select an executor or trustee of your estate. Without one of these legal documents in place, the property of the deceased is subject to Wisconsin’s intestate laws. In general, intestate succession of property works like this:
If you die with:
- A spouse but no children — spouse inherits everything
- Children, but no spouse — children inherit everything
- A spouse and children who are descendants of that spouse — spouse inherits everything
- A spouse and one or more children who are not a descendant of that spouse — spouse inherits one-half of your separate property; children inherit your share of community property and one-half of your separate property
- Parents, but no spouse or children — parents inherit everything
- Siblings, no spouse, children or parents — sibling inherits everything
- No relatives — state inherits everything
Under Wisconsin Statute Section 766, marital property is that which is acquired while you were married. Separate property is that which was acquired prior to marriage. There are exceptions to these rules in the case of gifts from third parties or inheritances — these remain separate property if give to one spouse, even if they were granted during marriage. These same rules apply to domestic partners. This provision applies only to division of marital assets through the death of a spouse and does not apply in the event of a divorce of the parties. During a divorce proceeding, pursuant to Wisconsin Statute Section 767, all property whether acquired prior to or during the marriage is presumed to be marital property with the exception of gifts from a third party or inheritances.
Children’s shares and guardianship
The size of each child’s share of the inheritance depends on the number of children a person has and whether or not you are married. Basically, inheritance is dependent upon whether the state considers them to legally be your children. This can be a complicated process.
- Automatically receive an intestate share: Adopted and biological children; children conceived by you but born after your death
- Do not automatically receive an intestate share: Foster children and stepchildren who were not legally adopted; biological children to whom your parental rights were terminated (who were legally adopted by someone else)
- May receive an intestate share: Children born outside of marriage whose paternity was acknowledged by you in writing; grandchildren whose parents (ie., your child) have died before you
Without a will, trust or estate plan in place, guardianship of children is determined by the state. If both parents die simultaneously, the state could be entrusted with the care of your children.
Assets not affected by intestate law
Certain assets may not be affected by intestate law. These assets are distributed to the co-owner of the asset or the named beneficiary. These include:
- Property placed in a living trust
- Life insurance proceeds
- Retirement account funds
- Properties, securities or bank accounts held in transfer-on-death or payable-on-death accounts
With the exception of the living trust, a beneficiary must be designated on these assets to avoid their passing through intestate succession.
Importance of estate planning
Without a will, estate plan or trust in place, you sacrifice any opportunity to determine how your property is distributed or how your children are cared for. Without one of these legal documents you cannot:
- Provide support for people in a manner that honors your wishes
- Divide assets according to your preferences
- Leave property to charities
- Determine how and when your children’s shares will be distributed
- Designate guardians for your children
- Arrange procedures that ensure your properties are well-maintained after your death
- Choose an executor or trustee of your estate
Intestate law is a complicated business. If you have questions, we encourage you to contact Tlusty, Kennedy & Dirks, S.C. at 715.359.3188.
