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| LegalBits | June 2004 |
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Where There Isn't A Will, There's Intestate One of the more uncomfortable legal issues, yet the only one (save tax) with which we must all deal is the law of probate. Courts have to handle the estates of deceased persons, because if property passes to descendants without title, one could have a very difficult time selling the assets at a later date. In addition, courts have to decide issues when there is a dispute over who should receive the property. Even in close families, where members might not otherwise wish to litigate against each other, it might not be clear why one child should get cash and the other the house. Many of you may not have a sophisticated will that lays out how you wish your estate to be distributed. This Memorial Day, it strikes me as particularly relevant to go over with you the rules governing estates that do not have a valid will. These rules are called the rules of “intestate succession.” This comes from the term, “intestate,” meaning to die without a will or testament, as opposed to a “testator,” who dies with a will. We are going to go over the intestate rules for the State of Texas, my state, but many states have similar rules. As always, consult a licensed attorney in your state. A Note on Community Property States Texas is a “community property state,” meaning property acquired by either man or wife during the marriage is property jointly held by both in equal shares. If you are married, just about everything you own will be community property. Exceptions include property owned by one of the parties before marriage, property acquired during marriage by gift, will, or inheritance where only party is named, and one party’s tort recovery in a personal injury litigation. The distinction between community and separate property is very important, because at death, the two are treated differently. If Survived By Spouse - Depends on Nature of Descendants If descendants are all from the surviving spouse (i.e. the decedent only had kids with the surviving spouse), the surviving spouse receives the decedent’s share of their community property. The decedent’s separate personal property is divided up 1/3 to the spouse and 2/3 to the descendants (the kids). Separate real estate is divided up 1/3 to the spouse in a “life estate” and the remainder to the descendants. This means that once the spouse dies, his/her “life estate” expires and that 1/3 automatically passes to the descendants. This is important in a situation where the surviving spouse goes on to remarry and has later children. Those later children will never see this separate real property. If decedent has children from another marriage/relationship, the surviving spouse will receive only his/her ½ share in the community property they technically owned anyway. The other half (the decedent’s share) of community property will be divided equally among the decedent’s descendants. Separate property is distributed the exact same way as before. 1/3 to spouse (and 1/3 life estate with real estate) and 2/3 to children. If decedent has never had children, the surviving spouse takes all of the community property. Separate personal property will be granted entirely to the surviving spouse, as well. Separate real estate, however, is treated differently. One half of separate real estate is granted to the spouse. The other half is granted to the parents of the decedent, or descendants of those parents (i.e. the decedent’s brothers and sisters). This is because the decedent might have owned some real estate, like a family farm, and it would be inappropriate to grant the decedent’s interest entirely to the surviving spouse, who could then sell or devise it to other, non-family members. If Not Survived by Spouse If the decedent is not survived by a spouse, there is no community property. All of the decedent’s assets will be separate property, so there is no distinction there. When the decedent is not survived by a spouse, the rules are very straight-forward. If the decedent has children, the assets all go to the children in pro-rata shares. If there are no children (or descendants of children), the assets pass to the decedent’s parents, each receiving ½. If there is only one living parent, then that parent receives ½ and the other’s children receives that parent’s ½. So, it will go on to the decedent’s brothers and sisters. Finally, if there are no parents or descendants of parents, you look at the decedent’s grandparents and their descendants, with the maternal grandparents receiving ½ and paternal grandparents and their descendants receiving the other ½. Finally, if no kin can be established (a rarity), then the estate goes to the State of Texas. Final Notes on Calculating Shares First, “half-bloods” receive half the share of “whole-bloods,” meaning that a half-sister would receive half the amount of a pure sister. This is important when there are children from multiple marriages. Also, Descendants receive assets on a “per stirpes” share. This is also called “per capita with representation.” This is less complicated than it sounds, because the calculation is very logical. Let’s say the last surviving grandparent dies, leaving 2 children and 5 grandchildren. One of the children, Abel, has 2 kids, the other, Bob, has 3 kids. If alive, Abel and Bob share the assets of the estate equally, 50/50. If only Bob is alive, then Abel gets 50% and Bob’s children share Bob’s 50%, meaning each get 1/6 of the estate. However, if both are dead, the grandchildren share equally, each getting 1/5. You take the first level of descendants, where descendants remain alive and divide them there. This means Bob’s children have an interest in Abel’s death. So, if you have nieces and nephews from deceased siblings, have few or no children, and very rich, living parents, watch your back! When you get down to it, probate law is much more about property than about death, so do not feel uncomfortable discussing your will (or lack thereof) with a qualified attorney. It is not nearly as morbid as you think. ---------------------- |
