What Happens If A Person Dies Without A Will?

Continuing our look at the specific estate and probate planning articles available on the website, today we will discuss the Intestacy provisions in Nebraska.

First, intestacy is the legal term for when a person, hereafter called a decedent, dies without a will.  Intestacy may be complete or partial; some property may transfer, such as property owned in joint tenancy or a bank account with a named beneficiary.

The rules of intestacy are mostly established by statutes enacted by the state legislature.  Those rules, which determine who will receive the property of the decedent, depend upon the degree of the relationship (e.g. child, sibling, parent) with the decedent.

Let’s look at some scenarios and possible outcomes:

Surviving Spouse:

If there are no living issue of the decedent and if there are no living parents of the decedent, the surviving spouse takes everything.

However, if there is a surviving parent(s) or surviving issue, the surviving spouse takes the first $100,000 and half the remainder of the estate.

Alternatively, if there are surviving issue and at least one of the surviving issue is not the issue of the surviving spouse, the surviving spouse takes only half of the estate, without taking $100,000 off the top.

Other Heirs:

If there are issue of the decedent, they take first, equally by representation.  This means if the issue are the same degree of kinship (for example, all children of the decedent), they take equally.  If the issue are different degrees of kinship, they take by representation.  In other words, if there are two surviving children and one predeceased child who had three children of his own, the two surviving children would each receive one-third and the three grandchildren would each receive one-ninth (the predeceased child’s one-third share divided equally among his three children).

If there are no surviving issue, the decedent’s estate goes to the decedent’s parents equally.

If there are no surviving issue or parents, the decedent’s estate goes to the issue of the parents by representation (e.g. brothers, sisters, nieces, nephews etc.).

If there are no surviving issue, parent(s), or issue of parent(s), half the estate goes to paternal grandparents or their issue and half to the maternal grandparents and their issue.  If one side has no relatives (i.e. no grandparents or issue of grandparents) then all of the estate goes to the other side.  The issue of grandparents take equally if they are the same degree of kinship or by representation otherwise.  For example, if the next of kin are an aunt and the children of a predeceased uncle, the aunt would take one-half of the estate and the children of the predeceased uncle would each receive one-quarter of the estate.

Beyond this point, we get into the concept of laughing heirs and if no such laughing heirs exist, the estate transfers to the state.

If you have any further questions, about how to avoid an intestate situation or the probate process in general, please contact us — we’re happy to answer questions!

 

First, some definitions.

When I was in high school and college, I was a competitive debater.  Every debate began the same: by defining the terms of the debate.  While we are not engaging in a debate on this blog, it is nonetheless useful to start with definitions.

As we more fully delve into estate planning on this blog, it is useful to keep definitions in mind.  The definitions are not difficult but nonetheless, it may be possible that these are terms that are not encountered in your day-to-day life.

Beneficiary:  This is the person who is is designated to receive benefits (such as money or income) from an insurance policy, retirement policy, a will, or trust.

Decedent:  The person who has died.

Estate:  This is all the property, both personal and real, that a decedent has at the time of death.  This is similar to a probate estate, which is all the property within a given jurisdiction.  Thus, if a decedent has land in both Nebraska and South Dakota, the decent has a probate estate in Nebraska and South Dakota.

Executor:  This is the person responsible for collecting all the assets of an estate, distributing all the assets to the proper beneficiaries, paying all claims made to the estate (e.g. final medical bills), paying taxes, and appearing at probate proceedings if required by the jurisdiction.  Also called a personal representative.

Heir:  A person designated to inherit some or all of an estate when the decedent dies without a will.  The difference between an heir and a beneficiary is the existence of a will or other estate planning document.

Intestate:  Also intestacy.  This is the state law that controls inheritance when a decedent dies without a will.

Joint Tenancy:  Joint tenancy, as opposed to tenants in common, allows individuals to transfer property with ‘right of survivorship’.  This means each each co-tenant shares an undivided, fractional interest in the property.  As each co-tenant dies, the undivided fractional interest passes to the remaining co-tenants.  Joint tenancy is most commonly found among husband and wives.  Each spouse has an undivided 50% interest in the property.  When the first spouse dies, his 50% interest passes to his wife.  The wife then has 100% undivided interest in the property.  Joint tenancy is a non-probate transfer of property.

Non-probate property:  Property that is not subject to probate.  This can include, but is not limited to, insurance policies, annuities, retirement accounts, property in trust, payable-on-death bank accounts, transfer on death deeds, and other such property that is paid directly to a beneficiary upon death from a source other than the decedent’s estate.  Non-probate property transfers automatically upon death and is not subject to probate proceedings.

Probate:  A proceeding in state court that is the administrative process for distributing an estate, whether by will or intestacy.

Tenants in common: Like joint tenancy, co-tenants share an undivided interest in property.  However, unlike joint tenancy, when a co-tenant dies, the undivided interest passes not to the other co-tenants but to those beneficiary/beneficiaries designated by the decedent.  For example, a husband and wife are tenants in common and each own a 50% undivided interest in property.  The wife’s will states that the beneficiary of her estate is the couple’s only child.  If the wife dies prior to her husband, her 50% interest does not automatically transfer to her husband (such as it would with joint tenancy), but rather, her 50% interest passes to her child.  Thus, the husband owns a 50% undivided interest and the child owns a 50% undivided interest in the property.

Testate:  Dying with a will.

Trust:  When property is held by a person or entity, called the trustee, for the benefit of beneficiaries pursuant to a written instrument known as a trust.  The trust articulates how the trustee can and should manage the trust assets for the beneficiaries.  There are many kinds of trusts and trust documents to list here.

Will:  A will is a document that details how a decedent wants his or her estate property to be distributed.  A will is subject to the probate process.  A will does not detail how non-probate property is distributed.