Most people have never heard of Minnesota’s laws of intestate succession. Those who have heard of intestate succession probably don’t know exactly how it works. In essence, the laws of intestate function as a default, statutory will, determining how your property will be distributed if you die without having first created a valid will. The intestate laws represent the state legislatures best guess for how you would want your property to pass to your heirs. And while intestate succession works as a good safety net, it is a poor substitute for an actual will.
The Intestate Estate
The laws of intestate only control what happens to your Intestate Estate. In order to understand what your Intestate Estate is comprised of, you first need to understand the difference between probate and non-probate assets. In general, probate assets are assets held solely in your individual name and need the help of a probate court to transfer title to your beneficiaries. Probate assets include tangible personal property, bank accounts, stocks, bonds, certificates of deposit, and real estate titled solely in your name. Non-probate assets do not require the help of a court to transfer title and are not subject to intestate succession. Non-probate assets include jointly owned property and assets with a beneficiary designation, such as life insurance proceeds, funds in a 401(k) or other retirement account, and real estate that has been conveyed by a transfer on death deed.
Your Intestate Estate is comprised of all your probate assets, excluding your family residence; up to $15,000 in certain exempt property which your surviving spouse or children can claim (household furniture, appliances, personal effects, etc.); and a certain amount of money set aside for your dependents called a family allowance. Consequently, the laws of intestate, just like a will, only control what happens to your probate assets.
The Intestate Succession Plan
Minnesota’s intestate laws determine who inherits your property if you die without a will. The end result depends on whether you are married or have children, parents, or other more remote relatives living at the time of your death. In general, the people most closely related to you will inherit your property.
Intestate Succession for Married Individuals: If you are married at the time of your death, your surviving spouse will inherit your entire Intestate Estate if you die without any surviving children or descendants. Your spouse will also inherit your entire Intestate Estate if all of your descendants are from you and your spouse, and your spouse has no descendants from a prior relationship. The law presumes that this is a fair distribution of your assets because most people would want to provide for their spouse’s comfort and there is little risk of your spouse disinheriting his or her own children. Things become a little more complicated if either you or your spouse have children, grandchildren, or other more remote descendants from a previous relationship. In such a situation, your spouse is entitled to the first $225,000 of your Intestate Estate, plus one-half of the remaining balance. Your surviving children will share equally in the other half of the remaining balance of the Intestate Estate; however, if any of your children predecease you leaving behind surviving descendants, the share that would have gone to your deceased child will be split equally between his or her children—your grandchildren. When a grandchild receives a portion of your Intestate Estate in this manner it is commonly referred to as taking “by representation”.
Intestate Succession for Unmarried Individuals: The laws of intestate succession give preference to the lineal descendants of an unmarried person. As a result, your Intestate Estate will be divided into equal shares for your surviving children and any deceased children who left behind descendants who also survive you. The share allocated to your deceased child will then be divided equally among his or her descendants in the same manner as described above. Your parents are next in line to take your individual property if you don’t have any living descendants. If both your parents are alive, your Intestate Estate will be split equally between them; otherwise, the entire estate will go to your sole living parent. In the event your parents are no longer living, your Intestate
Estate would pass to your siblings with their descendants taking by representation. Tracing the distribution of your Intestate Estate to other relatives can get a little messy. Depending on the circumstances, your individual property could end up in the hands of your grandparents, aunts, uncles, cousins, and other relatives. A flow chart is provided at the end of this article to better illustrate the process of intestate succession.
Why You Still Want a Last Will and Testament
The default rules of Minnesota’s intestate laws are a poor substitute for a will because these rules apply equally to estates without regard to the value of a person’s assets or the number of beneficiaries a person leaves behind. This one-size-fits-all approach can lead to some unfair results. For example, suppose Marnie passes away without a valid will, leaving behind her husband, Doug, and a son from a previous marriage, Gared. The only assets Marnie owns at her death is a primary residence valued at $300,000 and cash in the amount of $225,000. Under the laws of intestate, Doug will receive use of the family home for the remainder of his life and $225,000 in cash, less funeral expenses, taxes, and expenses of Marnie’s estate. Gared will not receive anything.
If you don’t like the default plan the government has created for you, it may be time to think about creating your own estate plan. Estate planners can do so much more with a will that simply direct assets to your intended beneficiaries. Creating a last will and testament will allow you to designate your own Personal Representative to administer your estate, as well as name a guardian for any minor children should you meet an untimely demise. Your will can also incorporate provisions that place conditions on gifts, grant life estate interests, or establish a trust for the benefit of your descendants until they reach a certain age.
The laws of intestate are designed so that a spouse, descendant, or other remote relatives have an opportunity to inherit your property if you fail to create a will before your death; however, these intestate laws can lead to some unfair outcomes and don’t allow for the specialized planning most families need. If you would like more control over what happens to your estate, it is recommended that you consult with an attorney to create your own individualized estate plan.
This information is general in nature and should not be construed as tax or legal advice.