How the law applies to

Your Unique Situation

We live in an era when unmarried people live together and people have children without marriage. In these situations, your “significant other” may receive no assets if you don’t have a will. If you and your significant other have children, your children may inherit, but your significant other may not. Here the default settings, aka “laws of intestacy,” may not align with your wishes.

Unique Situations to Consider

Depending on your unique circumstances, there are laws that dictate what does or doesn’t happen if you die without a will. The best way to protect your loved ones, is to write a will that makes sure your assets pass as you intend. The present law default settings do not necessarily reflect the wishes of most single people or unmarried couples.

State intestacy laws provide default beneficiaries who receive your assets if you don’t have a will. Typically these are your relatives. If you’re married and have children, they generally inherit all assets. The law assumes this is what most married people would want. But it’s important to have a will if these general rules don’t apply to you or are not what you want.

For example, for single people, or couples who are not married, these default settings may provide that your parents or siblings inherit. A single person may want his significant other, or the mother of his children to inherit. If that wish doesn’t align with the laws of intestacy, you need a will to make it happen. Without a will, your “significant other” may receive no assets if you don’t have a will. If you and your significant other have children, your children may inherit, but your significant likely won’t.

In addition to state laws about who inherits if you don’t have a will, state laws also determine if a will is validly executed, and whether a document such as a health care proxy or power of attorney, contains the proper instructions. Federal law is more impactful when it comes to the tax treatment of trusts, gifts or certain transactions that are part of estate planning. States may impose estate or inheritance taxes as well.

Married

Married people may make gifts to each other and there are no tax consequences. They can leave an unlimited amount to each other and not pay estate tax. If LGBT couples are married, the rules that apply to married people apply to them.  If a married person dies without a will, the laws of intestacy (without a will) generally provide property will go to their spouse and children. By law, married people must inherit a spouse’s pension, and a spouse is automatically written out of a will upon divorce.

Single

For single people, planning can be more challenging because there are no special tax breaks, like an unlimited marital deduction. Also, if you fail to write a will, your property will pass to your blood relatives and not necessarily the people who are closest to you. There are also no federal law protections about the right to receive a spousal share of a pension, or continuation health care coverage.

Foreign

Foreign residents are treated the same as U.S. citizens for many purposes. However, if an American is married to a foreign person, who is not a U.S. resident, tax breaks such as an unlimited marital deduction, are not available. Instead, a special trust known as a QDOT, may be set up to enable a non-resident spouse to receive funds from a deceased U.S. spouse without onerous tax consequences. If property is owned overseas, the tax treatment under a U.S. citizen’s will may depend on a tax treaty, as well as the foreign country’s law.

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