by Kevin G. Harvey May, 2011
When a recent client's husband died, she was surprised to find that he owned some property titled only in his name. She had thought that all of their property was jointly owned. The value of the property in her husband's name exceeded the Indiana probate threshold of $50,000, so the property had to be administered through the courts. Unfortunately, this client's husband died without a will (he died "intestate"), so I had another surprise for her when we met for the first time: she was not the only beneficiary of his estate.
In Indiana, the laws of "intestate succession" determine how your property will be distributed if you die without a will. Most people with whom I discuss this issue assume that if a married person dies without a will, the law would provide for the surviving spouse to inherit all of the deceased spouse's property. But that is not necessarily the case. If a married person dies without a will and has surviving children, the surviving spouse will only receive one-half of the deceased spouse's property; the other half passes to the children. (If the surviving spouse is a second or subsequent spouse, the surviving spouse will receive even less). Thus, because this client's spouse died without a will and they have children, we now had to deal with the fact that the law requires distribution of one-half of the husband's property to their children.
In this instance, the children willingly signed "disclaimers" - documents terminating their status as beneficiaries of the estate - to allow their mother to inherit all of the property. However, if one or more of the children had refused to sign a disclaimer, those children would have received their portion of the estate. If the children in this kind of a situation are minors, the lack of a will is even more problematic as minors do not have the legal capacity to sign a disclaimer. A guardianship will have to be established for the minor children to hold the property for them until they reach the age of eighteen. For the client whose husband died intestate and owned half the stock in a business, the fact that their minor children now own a half interest in the stock has created some real practical problems for the surviving spouse.
These kinds of predicaments for surviving spouses can be avoided with a Last Will and Testament. Every person should have a will - even, as it turns out, spouses who believe everything is titled jointly. For some clients a complex will or estate plan may be appropriate, but at a minimum everyone should put his or her wishes to paper in the form of an effective will. Otherwise, the law may provide an occasional surprise for surviving family members.