Intestate Succession: What Happens if You Die Without an Estate Plan?
As the saying goes, “you can’t take it with you.” But what happens to your property if you die without a will or other estate planning documents, like a trust? In a nutshell, your assets are distributed according to state law of “intestate succession.”
Every state, including New Mexico, has intestate succession laws. These laws are intended to distribute the property of a deceased person, or decedent, as most people would choose to do if they had made a will. That means that if you die without a will, your spouse and/or children will inherit your estate. If you don’t have a spouse or children, your parents will inherit. If your parents are deceased, your surviving siblings are next in line. If you don’t have any surviving siblings, your estate goes to your closest surviving relatives.
Spouses and Children in Intestate Succession
For many people, intestate succession means that a surviving spouse and children inherit their estate. If you leave behind a spouse but no children, your spouse inherits everything; if you have children but no spouse, your children inherit the entire estate. If you have both a surviving spouse and surviving children, the division of property depends on the nature of your property.
In New Mexico, property that you acquired during your marriage is generally considered community property (with limited exceptions, such as an inheritance or gift that you received during marriage and kept apart from your community property). Property you acquired before marriage or certain inherited or gifted property is considered separate property.
New Mexico intestate succession laws give a surviving spouse all of the deceased spouse’s community property and ¼ of their separate property. The surviving children take the remaining ¾ of separate property. There’s a certain logic to this. If your surviving spouse was also the parent of your adult children, there’s a good chance that much of your property was community property acquired over a long marriage. After your spouse dies, that property will probably go to the children you had together.
On the other hand, if your children are from a previous relationship and you married your spouse later in life, you might have less community property, and more separate property that you acquired before your marriage. Much of that separate property would go to your surviving children, who would not be children of your surviving spouse (and therefore would not inherit from him or her under state law).
All of this probably sounds pretty reasonable. So you may be wondering: in light of intestate succession laws, why bother making a will or estate plan at all?
Glad you asked.
Why You Shouldn’t Count on Intestate Succession Laws to Divide Your Estate
Intestate succession laws distribute a decedent’s estate roughly as most people would. But most people aren’t like “most people.” Humans are complicated. You might be close to one parent and completely estranged from the other. You may trust your daughter to manage her inheritance, but worry that your son will blow his share on get-rich-quick schemes. Your second wife may be independently wealthy and may not need a dime from you, while your adult children do.
In short, intestate succession may achieve a result sort of close to what you would want, but might not quite achieve your goals. It’s worth the investment in an estate plan to make sure your wishes are actually honored.
Even if intestate succession would divide your estate exactly as you would wish, it’s still a good idea to have a will or trust-based estate plan for a couple of reasons. First, an estate plan gives clarity about what your assets are and your wishes for them. Probating a will or administering a trust is generally less stressful for your family than dealing with an intestate estate, even if the financial outcome for your heirs is exactly the same.
Second, your estate plan is not just your will or trust; it also consists of powers of attorney and health care directives. Those documents mean that if you become unable to make decisions for yourself during your life, someone you trust will have the power to make those decisions for you. Every adult needs those documents in place, regardless of the makeup of their family and the size of their estate. So, you might as well make a comprehensive estate plan including a will while you’re at it.
Another good reason to make an estate plan applies in the case of second or subsequent marriages. Remember a few paragraphs back when we were talking about how sensible intestate succession laws are when it comes to dividing separate property among surviving spouses and the decedent’s children from a previous relationship? There’s a big exception.
The exception is that separate property doesn’t always stay separate. It can easily become commingled with community property. Let’s say that you inherited $100,000 from your own father, who sensibly died with an estate plan. That inheritance is your separate property. But you put it in a joint bank account with your new spouse, along with all your other income. That asset is now commingled with community property, and is impossible to separate out.
Even if you don’t actively commingle your separate property with community property, it’s unlikely your separate property is clearly branded as such. Trying to determine what’s separate and what’s community can lead to conflict and probate litigation—which can dwindle your estate.
The bottom line is that making an estate plan is an investment: in making sure your wishes are known and honored, in protecting your assets, and in preserving family harmony. To learn more about New Mexico intestate succession and how to avoid it, contact The Law Offices of Dana M. Kyle to schedule a consultation.