What is Intestate?

Intestate means dying without a will.

How Does Intestate Work?

For example, let’s assume that John Doe dies without a will. He has a sister and a brother, but no wife or children.

Because John died intestate, the estate goes to probate court, as do many estates large and small. In this case, a judge has to allow the transfer of John's money and property to the sister and brother. This procedure (probate) opens the door for relatives or third parties to contest the judge's decision or to offer interpretations (or misinterpretations) of John Doe’s last wishes, both of which can tie up an estate in court for years.

Why Does Intestate Matter?

Dying without a will means allowing the state to decide how to distribute your assets after you die. Generally, a court-appointed executor, who may or may not have known you, will make the distributions. Many states have laws regarding the distribution of assets of people who die intestate. Often, these laws state that spouses inherit the entire estate, though some will cap the value and give excesses to children or other parties.

Many people think they don't need to do any sort of estate planning, and they think that the existence of a simple will does the job. However, wills are simply legal documents that express the decedent's intentions for burial and to whom he or she wishes to pass money and property (the estate) when he or she dies. In many cases, wills must also go through the probate process.

Establishing a trust often aids greatly in this situation because it allows a person to transfer legal title of his or her property to another person while they're still alive, potentially saving thousands in probate fees (and taxes). A trust also gives the trustee (the person acting on behalf of the decedent) the authority to distribute assets immediately to the beneficiaries based on the terms of the trust. No court is involved, so there are no probate fees and no public record of the value of the estate. Trusts are not for everyone, however, so it is important to seek proper financial advice.

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Paul Tracy
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.

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