What Happens to Your Property When You Die?
Many people do not understand what happens to their property when they pass away without a will or other estate plan in place. Clients have variously told us they believed all of their property automatically transfers to a specific family member or even to the government upon their death, without any sort of formal process. While some things may transfer automatically, like property held as joint tenants with rights of survivorship, many people are surprised to learn how property actually passes after someone dies.
A person can die either testate (with a validly executed, unrevoked will at the time of their death) or intestate (without a valid will). Either situation may require the person’s estate go through probate, which is a court process by which all of the person’s property and liabilities are taken into consideration, valid liabilities are settled, and title to any remaining property is transferred to the person’s heirs or devisees. The probate process is not automatic—someone needs to petition the court to begin the process—and it can take six months to more than a year to complete, depending on the size of the estate and whether any issues arise.
If a person dies testate, probate is opened, and the person’s will is given to the court, the person’s property will generally transfer according to the terms of the will—subject to creditors’ claims, whether the person actually owned what they try to give to someone in their will, and whether any interested person (someone who gets property under the terms of the will or if the will is proved invalid) contests the validity of the will.
When a person dies owning property but without a will or other estate planning measures, the intestacy laws apply. These differ from state to state. The intestacy laws in Florida are the state’s best guess at how a typical person would want their property distributed after they die. Generally, the order of who gets a deceased person’s property is as follows: surviving spouse, children, parents, siblings, grandparents, cousins, and then last spouse’s family. So, if a person dies intestate and their spouse is still alive, everything will go to the spouse; or, if a person dies without a spouse or children, and the person’s parents had already passed away, everything would be split between the person’s siblings. There are also some exceptions, like when a person is survived by both a spouse and children from outside the current marriage, in which case the spouse and children each get some of the property. Finally, if there is absolutely no one who would be able to inherit the property under the intestacy laws, the property goes to the state, which is called escheat.
Florida’s intestacy laws also distribute property per stirpes, which is Latin for “by the branch.” This means that if property would have gone to someone who already died but had children, the children would split that person’s share. For example, Dan passed away, had no spouse but three children, Ada, Becky, and Charlie. Charlie passed away before Dan but had two children, Ezra and Fionna. Dan’s property would be distributed as follows: 1/3 to Ada, 1/3 to Becky, 1/6 to Ezra, and 1/6 to Fionna. Since Dan had three children who stand to inherit, his property is split into thirds. Because both Ada and Becky were alive, they each get a full share, but since Charlie passed away before Dan, Charlie’s children each split Charlie’s share.
As you can see, the intestacy laws do not take into consideration the actual strength of personal relationships or anyone outside the family tree—the child that takes care of you in your final years will inherit the same share as an estranged child, and no matter how close you are with a friend, she will not inherit anything from you. Creating a valid will is a simple way for a person to have a say in where their property goes when they die, taking into consideration their relationships and wishes. Other estate planning instruments, like trusts and Ladybird Deeds, can transfer property automatically on death and avoid the probate process altogether. For more information, check out trusts and non-probate transfers.
If you would like help creating an estate plan tailored to your unique situation, please reach out to us to schedule a consultation.