This post is not legal advice
Recently, the singer Prince suddenly passed away, but many of you may not have seen the news that he died without a will (http://wapo.st/1YgOGvX). The rapper Snoop Dogg has discussed not having a will and not wanting to make a will either (http://onforb.es/1YgOIE9). In fact, Snoop Dogg has stated he would prefer to watch his heirs fight over his money after his death. Although many of us at times may not want to consider how to distribute property at our death, developing an estate plan can save fights and heartache for your heirs.
Dying without an estate plan can lead not only to conflict but also to an expensive and bumpy transition of your business. For example, Farmer Green has three children. One child works on the farm and plans to take it over when his father retires. The other two children have jobs off the farm. If Farmer Green does not develop an estate plan, then his three children would share equally in the farm. Farm child may not be able to afford to continue to farm while buying out the two other children. Developing an estate plan can allow you to take care of these issues easily before your death.
When you pass away without a formal estate plan or an estate plan which covers only a portion of your estate, your estate would be called an intestate estate. Intestate simply refers to property not disposed of, or distributed, by a will. Intestacy is being intestate at your death. When you die intestate, your property is distributed according to state statutes and these statutes can vary state-to-state.
In Maryland, how property is distributed will depend on a couple of factors. First, do you have a surviving spouse? Do you have surviving minor children or adult children? Do you have a surviving parent?
Let us deal with the surviving spouse first. If you have a surviving spouse but no children or parents, then your whole estate would go to the surviving spouse. With a surviving spouse and surviving minor children, the surviving spouse would get half of your estate. With a surviving spouse and surviving adult children, the surviving spouse would get the first $15,000 plus one-half the remainder of the estate. In a situation with a surviving spouse, no surviving children, but a surviving parent, then the surviving spouse would get the first $15,000 and one-half remainder of the estate. If there is no surviving spouse, then the entire estate would go to the surviving heirs.
For example, Charlie passes away suddenly, leaving behind a wife and two adult children. Charlie and his wife never put together an estate plan. Charlie's wife would receive $15,000 plus one-half the remainder of Charlie's estate and the remainder would go to his two adult children.
The remainder of Charlie's estate would be divided up among his two adult children according to per stirpes division. Per stirpes is a Latin phrase which means by the branch. With per stirpes division, each branch receives an equal share of the estate or the remainder of the estate. In Charlie's case, the remainder of his estate would be divided in half for each of his two adult children. If one of Charlie's children predeceased Charlie, but the deceased child had a child (Charlie's grandchild), then that surviving child would inherit the parent's share of Charlie's estate. Confused yet?
What if Charlie passed away with no surviving spouse? In this case, Charlie's entire estate would be divided up equally between his two children. If any of the children died before Charlie, then the surviving grandchildren would receive that predeceasing parent's share to share equally.
If Charlie passed away with no surviving spouse and never had children, then his estate would be distributed to his parents equally. I can start confusing this more by discussing what happens if Charlie’s parents die before him, but I think you get the point that state law has a plan in place for your estate if you die without a will.
This process becomes more complicated if you passed away without an estate plan for real property in more than one state. For example, if Charlie owned real estate in Maryland, Delaware, and Pennsylvania, Charlie’s real property would pass under the intestacy laws in each of those three states. Clearly, the lack of an estate plan in this instance will add confusion and stress for your loved ones.
Estate planning resources are available through the Department of Agricultural and Resource Economics, the Agriculture Law Education Initiative, and the Maryland Crop Insurance Education Program. Or see the website at the University of Maryland Extension’s homepage dedicated towards farm transition and estate planning issues: http://go.umd.edu/agtrans.