Family is a factor

Family Is a Factor in Almost Every Estate

Estate planning is always a family affair. Family is a factor whenever someone dies — even if relatives stand to receive nothing at all.

For people without Wills or Trusts, family is the default (not “the state,” as many people believe). State “intestacy” laws try to guess what most people would want, and they get pretty close. In Arizona, intestate estates generally pass as one might expect: to the surviving spouse (with one important exception), then children, then grandchildren, and then their issue. If descendants of children are deceased, then to the decedent’s parents or their descendants (the decedent’s siblings, then nieces and nephews, then their children). Say all of those predecease the decedent, then to grandparents, and if not living, their descendants (the decedent’s aunts and uncles, then their children, and so on). An estate goes to the state (or “escheats”) only if there is no family member living who is a descendant of the decedent’s  grandparents. A graphic known as the consanguinity chart can be helpful in visualizing which family members are potential takers.

Family is a Factor for the Unexpected

People with carefully thought-out Will or Trust estate plans also need to think about these rules. They are almost always the default if things don’t go as planned. (It happens.)

Wills and Trusts often include a provision for remote contingency. That’s where the estate goes if the expected recipients die before the decedent. Provisions often name “heirs” “or heirs-at-law” next. And the intestacy laws mentioned above determine who they are. These laws govern other similar language, too, such as “next of kin,” “relatives,” or “family.”

In Arizona, these same laws decide who receives any part of an estate for which no “taker” is alive. Some people write estate plans and bequeath specific items and accounts, and forget the residuary provision. Or, the part that covers everything not specifically addressed. If there’s no one living to receive the property, those assets pass by intestacy.

Intestate rules also may surface for retirement accounts, annuities, and life insurance policies. Each should list a beneficiary. But, again, if no one was named or the person named has died, the intestacy rules could rule. These types of assets are governed by their own rules, policy, or contract, and the “default” can be “heirs” or a similar term. If so, the laws of intestacy may determine who those people are.

Family is a Factor for Probate

The basic process of filing a Will with the court for a probate proceeding also conjures up “heirs.” The heirs of a decedent receive notice of the proceeding–even if they receive nothing under the Will. That’s right, if you are single with estranged kids and leave everything to charity, your kids will get an envelope in the mail that alerts them to that fact. (If you don’t want that, consider a trust.)

Many people, in fact, have trust plans to avoid this notice and protect their privacy. But often assets are not transferred to the trust, and a probate is needed to move them into the trust, via a “pourover” Will. If that happens, the decedent’s heirs receive notice. And that can mean searches for nieces, nephews, cousins, and more remote relatives, will be necessary to administer the trust.

Consider an Inventory of Family

Because family is a factor so often in the administration estates, it can be helpful to consider who your heirs are and take steps now to make things easier on your executor. Consider:

  • Do you want more remote relatives to receive your estate if your main beneficiaries don’t survive you? Would you prefer close friends or charitable organizations as your “default”? Does your plan accomplish those wishes?
  • Do your documents accurately reflect your actual family? Are all your children (including deceased ones) named? Estranged children and children of deceased children may be entitled to notice. Your executor will need to know who they are.
  • Will your executor be able to track your family tree, if needed? If not, consider doing some research. Be sure to include deceased relatives and note whether they had children. Keep a list of contact information and update it, if possible.
  • Do you review your documents and beneficiary designations annually? It’s a good idea to remove those who have died or drifted out of your life.

Because family is a factor in so many areas of estate administration, tracking of the branches of your family tree can save your estate time and money. Executors spend considerable time trying to track down family members. Executors find heirs using Facebook, hiring professional heir searchers or private investigators, doing historical research, and interviewing family members (whose stories should be verified!).

However, if you leave accurate records, your estate can avoid the time and effort (and fees) associated with searching. Keeping records also helps your executor administer your estate efficiently and get funds to your loved ones. Funds can’t go out until all the parties who need notice receive it.

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