Usually when a famous person dies, news of their death travels fast, far and wide. Living relatives and those claiming to be relatives will come forward staking their claim on estate assets.

If you die without a will or trust, you have died “intestate” and state law will determine how your assets are distributed. State law will provide a hierarchy of beneficiaries to which an intestate estate will be distributed. The state intestate succession law will only apply to those assets that would have passed through your will, known as “probate” assets, which you owned at the time of your death.

For example, some accounts you own may have named designated beneficiaries, such as an IRA or life insurance policy. Such assets will be distributed to the named beneficiaries. Also, joint assets and “paid on death” accounts will also pass to the joint or paid on death holder even if there is no will.

If you die without a will in New Jersey, determining who gets what depends upon factors such as: do you have a living spouse, children, parents or other close relatives. It can get complicated with blended families, children from multiple marriages, half and whole siblings and their decedents. Click here to see the NJ intestate succession law. In NJ, if you die without a will and do not have any close family your property will “escheat” to the state coffers.

Dying without a will is costly

Unless your estate is insubstantial, if you die without a will the Surrogate Court will appoint an estate administrator. It is the administrator’s responsibility to secure your assets, pay any debts and taxes as well as search for any heirs. Administrators will be paid by the estate for their services.

Prince’s estate could be worth in excess of $150 million and most likely will earn millions over years to come. At the time of his death, he was known to have a sister and half-siblings. His parents were deceased and he had two ex-wives. Rumors surfaced that he may indeed have a child born out of wedlock and at least one individual claimed he was Prince’s son. Under Minnesota inheritance law all siblings are treated equally. Without a will and clear instructions as to how Prince wanted his assets to be distributed, most likely there will be a will contest over the estate.  Litigation is expensive. The attorneys are sure to benefit along with the State and Federal governments due to the lack of estate planning and tax minimization strategy he could have had in place.

Who should have a will?

If you want your assets to be distributed in a manner of your choosing, you will need a will or a living trust. Your will appoints an “executor” who you choose to be in charge of securing your assets, filing and paying any taxes, and distributing your assets as you have instructed. Of great importance, a will makes it easier for your loved ones to work it all out.

If you have minor children your will can provide for the guardianship of those children. A will can also provide an opportunity for estate planning, potentially reducing estate or inheritance taxes. You may believe your estate is not large enough to require a will. That may not be so true in a state like New Jersey that taxes estates in excess of $675,000 in addition to collecting an inheritance tax on certain family member beneficiaries. The process of preparing a will can also provide an opportunity to review designated beneficiaries on any retirement accounts and life insurance policies, and to determine if you have adequate life insurance coverage.

At KRS, we work with individuals in developing tax minimizing strategies for current taxes as well as estate tax planning, estate administration and estate tax compliance. Visit our website to download our executor’s checklist for more information regarding the estate administration process.