What Really Happens If You Die Without a Will or a Trust?

People depend on you. You’ve worked hard for your assets. Not just for yourself but for your family, friends, and the communities you care about. You can help them while you’re here… but once you’re gone, who will ensure they’re taken care of the way you intended? Well, it depends on how well you plan your estate.

Let’s start with the basics. What even is the difference between a will and a trust?

Your estate plan can include a will, a trust, or both. The perfect plan depends on your financial situation and how you want to provide for others after you pass. But this is the fundamental difference: a will is a set of instructions you leave behind to tell the probate court exactly how to distribute your assets. You can define how to pay off your debts and taxes, manage guardianships for dependents, leave specific assets to specific people, or establish new financial vehicles. Keep in mind it’s only valid if it’s witnessed and notarized, and in most instances it won’t avoid probate court.

A trust is a legal arrangement that puts your assets into a plan while you’re still alive. You can designate the trustee, which can be you while you’re here, and a successor once you’ve passed. It’s the trustee’s job to manage and protect the assets for your future beneficiaries. A trust can reduce estate taxes and probate costs (or avoid probate all together), leaving more for the people you care about.

So, what really happens if you die without either of these types of plans?

If you don’t have a will or trust, that’s called “dying intestate.” This happens when you don’t specify your preferences, which means the state probate court decides who gets what, when, and how. You may have named beneficiaries on a few specific assets, such as a pension or a life insurance policy, but beyond that, the court will choose who gets everything else.

When you neglect to establish a will or trust, the state chooses who receives your money and assets by following the laws of intestacy. The government is first in line. If you owe the local, state, or federal governments any taxes or other debts, they will take their cut before anyone else. Then come the creditors. That means anything you may have left unpaid, like loans of any kind or revolving accounts, will be paid off. Whatever’s left after all those obligations are taken care of, the probate court will start following your family tree to choose who will receive your remaining assets.

Probate rules vary from state to state, but generally the process goes through these stages: Open Probate, Notify all Potential Heirs, Notify All Creditors, Administration of the Probate, Accounting, then the Probate is closed. From end to end, the whole procedure is public information that anyone can see. Even if you leave a will, it only serves as instructions for the probate court. It doesn’t avoid the probate process or the public distribution of your financial information. That’s just one place where a properly funded trust has distinct advantages over a will. A trust avoids probate… and it can deliver privacy as well.

But, who can create your estate plan?

Well, there’s really only two people that can. It’s either yourself, or a licensed attorney.

If you decide to go the do-it-yourself route, how will you know that you did it correctly? Frankly, you won’t. A do-it-yourself estate plan won’t be put to the test until it’s too late to change it (i.e. when you become incapacitated, or pass away). Unless you are an attorney that specializes in estate planning, drawing up your own will or trust could come with some risks (remember that pesky term “dying intestacy”?). A lot of our clients believe it’s not a risk worth taking.

That’s why they decided to go with the other option – consulting a licensed estate planning attorney with Oath. Our little-known estate planning process leaves clients with peace of mind, knowing they did everything they could to protect the things they’ve worked hard for. Our plans are created with each client and their unique situation in mind. We don’t just pull a document off the shelf and call it good. And we provide affordable, transparent plans that make securing your family’s future free from stress and inconvenience.

So, do you really need a will or a trust?

If you’re at all concerned about what happens to your family and your hard-earned assets when you pass away, you should seriously consider a will or trust, regardless of the size of your estate. After all, we’re not talking about one-percenters with billions to manage. We’re talking about folks like you, who’ve worked hard to build a personal nest egg. This includes bank accounts, home equity, stocks or bonds, and even a paid-off car. Any assets you earned should be distributed how you want, to whoever you want.

Establishing a will or trust to protect you and your family is critical and time-sensitive. Because failing to plan is costly.

Planning ahead with Oath Law? That’s just smart money. Sign up for one of our free estate and retirement planning workshops at www.oath.law/workshops or request a free consultation.