If you fail to create an estate plan and die without a will, the Commonwealth of Pennsylvania will, in essence, prepare one for you based on the law of “intestate” succession.
Briefly stated, the Pennsylvania intestacy statutes set forth the persons to whom your property will pass and the division of your estate among those persons. The distribution scheme set forth in the statute is inflexible and may not be in accord with your wishes. Additionally, any amounts passing to your children will require a cumbersome and costly legal guardianship if the children are minors at the time of your death.
So how does the Pennsylvania intestate law work?
In general, it is quite simple. Your “intestate estate” is made up of all property that is not disposed of by will or otherwise. Certain property, due to its nature or form of ownership, will not be included in your intestate estate and will be transferred outside of the intestacy statutory scheme.
For example, any property you own as a “joint tenant” or as a “tenant by the entireties” – including real estate, bank accounts, and savings bonds – will pass automatically at your death to the remaining joint owner(s).
Additionally, contractual arrangements with a designated beneficiary – such as life insurance proceeds or retirement accounts – will also pass outside of the intestacy statutes. Any remaining property will then pass to the persons and in the amounts provided for by law. If you are survived by a spouse, the share he or she will receive varies depending on who else survives you. The results are summarized as follows:
No Children or Parents Survive. In this scenario, your surviving spouse will receive the entire intestate estate.
Children Survive. If you are survived by children (all of whom are also the children of your spouse), then your spouse will receive the first $30,000, plus one-half (1/2) of the balance. Alternatively, if one or more of your surviving children are not the issue of your spouse, then your spouse will receive just one-half (1/2) of the intestate estate. For example, if you die with a $100,000 intestate estate and all surviving children are issue of your spouse, he or she will receive $65,000 (i.e., the first $30,000, plus ½ of the remaining $70,000). If, however, one or more of your children are not the issue of your spouse, he or she will receive only $50,000 (i.e., one-half of the intestate estate). Your children will receive the remainder.
One or Both Parents Survive. If you are survived by one or both of your parents, but no issue, then your spouse will receive the first $30,000, plus one-half (1/2) of the balance of the intestate estate. For example, if you die with a $100,000 intestate estate, your spouse will receive $65,000 (i.e., $30,000, plus ½ of the remaining $70,000). Your parent(s) will receive the remaining $35,000.
What happens if there is no surviving spouse? In that case, your estate will pass in the following order:
- To your issue (i.e., your children and grandchildren).
- If no issue survive you, then to your parents (or the surviving parent).
- If no parent survives you, then to the issue of your parents (e.g., your siblings, nieces, and nephews).
- If no sibling, niece, or nephew survives you, then to your grandparents – half to your paternal grandparents and half to your maternal grandparents.
- If no grandparent survives you, then to your uncles, aunts, and cousins.
- Finally, if none of your family survives you, then your estate will pass to the Commonwealth of Pennsylvania.
Because the above scheme is inflexible, it is essential that you prepare a will if you desire for your estate to pass in a manner different then that set forth above. However, even if Pennsylvania’s distribution scheme accurately reflects your wishes, other problems may arise if you die before preparing a will.
For example, if you are survived by minor children but not a spouse, a judge will decide with whom your children will live and who will be responsible for managing their property. The judge will also choose the person who will administer your estate. By preparing a will, you, rather than a judge, will make these important decisions, saving your heirs from expensive (and preventable) litigation.
Additionally, the problems of dying without a will are aggravated if, for example, a married couple with children owns a family business with 50% owned by each spouse as separate property. If one spouse dies without a will, his/her ownership interest may pass to the surviving spouse and minor children, and a legal guardianship would be required to manage the portion of the business interest that passes to the children. The surviving spouse would have the guardianship for the minor children as a “partner” in the family business.
This is a highly undesirable result; in accordance with the requirements of a guardianship, the guardian may be required to post a bond and file detailed periodic accountings with the court, needlessly increasing costs.
Finally, if you die without a will, any property passing to your adult children will be distributed outright and free of any restrictions. This can be especially problematic if any of your children are in debt at the time of your death. Funds that otherwise would be used for their benefit will now be subject to the claims of their creditors. This situation could easily be avoided with simple prospective planning.
The attorneys at Mosebach, Funt, Dayton & Duckworth can help you understand how your estate would be distributed if you die without a will and explain the reasons a will might benefit you and your family. We can provide the peace of mind that comes from knowing your estate plan is in place and your property will be distributed according to your wishes. If you have any questions, please contact MFDD today.