Did you know that if you die without a will, each state in the U.S. has already written one for you? These default “wills” are actually called “intestacy statutes” and they generally provide the following as to the division of your probate assets:
- If you’re married and your current spouse is also the biological or legally adoptive parent of all of your children, all of your assets go to your spouses, if he or she survives you.
- If you’re not married at the time of your death and you have biological or legally adopted children, all of your assets go to your children, equally.
- If you’re not married at the time of your death and you don't have biological or legally adopted children, all of your assets go to your biological or legally adoptive parents, if they are living.
- If you’re not married at the time of your death, you don't have biological or legally adopted children, and your biological or adoptive parents aren’t living, all of your assets go to your biological or adoptive siblings.
- And so on and so forth, all the way up to the chain to biological or adoptive cousins.
If you’re in a second, third, fourth, etc. marriage, you may have noticed the absence of a potentially very important group of people, whom you may love very much: step-children.
You see, step-children generally have no legal relationship to their step-parents, only to their biological or legally adoptive parents.
This means that step-children won’t necessarily be entitled to a share of a their long-time-step-parent’s probate estate.
Most people that I speak with are down-right shocked by this policy and become very motivated thereafter to put to put an estate plan into place.
Perhaps the best way to explain is to use an example:
Fran’s first marriage was fairly short and ended in divorce. Fran has been happily married for the past 30 years. Fran’s had two children with her first husband, but no children with her second husband. Her husband, Jerry, also had two children from his first marriage. Fran and Jerry raised their four kids as if their own. If Fran and Jerry rely on the distributions set forth in Arizona’s intestacy law, and Fran passes away before Jerry, half of Fran’s assets will go to Jerry while the other half will go to her two biological children.
But when Jerry passes away, none of his assets will go to Fran's children, which may not have been what he intended. Also, Fran likely wanted all of her assets to go to Jerry while he was still living, not just half of them.
It’s important to note the term probate as used above.
Some types of assets are subject to probate, such as cars or personal property, while others are not, such as:
- Real estate owned in joint tenancy or as community property;
- Life insurance;
- Bank accounts held in joint tenancy or as community property;
- Individual Retirement Accounts ("IRA");
- Other retirement account governed by ERISA.
The distribution of these assets is typically set forth by naming beneficiaries in association with the assets, however, the precise distribution provisions associated with each of these types of assets vary widely: they can be based upon classes of individuals or simply may use the name of individuals.
Importantly, however, these assets aren't typically subject to the terms of a will.
So what can a person do to better ensure that the person’s step-children, or anyone else for that matter, aren’t unintentionally disinherited:
Develop a comprehensive estate plan.
Don't let the word comprehensive scare you, though. There's a good chance that the estate plan doesn't even need to have a lot of bells and whistles — i.e. be expensive — it just needs to be comprehensive and take into account all of your assets.
This brief overview of some important considerations associated with estate planning in Arizona is by no means comprehensive. Always seek the advice of a competent professional when making important financial and legal decisions.
Steve Cook is a estate planning lawyer at Cook & Cook. Although his main office is located in Mesa, Arizona, he represents clients throughout the Phoenix, Arizona Metropolitan area including the following east valley cities: Scottsdale, Paradise Valley, Tempe, Chandler, & Gilbert.
