Many people I’ve met have not written their will. Some feel that they are not wealthy enough to need one, while others have been procrastinating because they do not know where to start. Below are five things which you may not be aware of, that happens when a person dies intestate, without a will.
Fact #1
The Court will decide and appoint the Administrator
When the person who has died (the decedent) leaves a will, the court normally appoints the person named in the will to serve as executor of the estate. However, when a person dies intestate, the court will need to appoint an administrator.
Like the executor (in the case of a will), the appointed administrator will report to the court to ensure that the decedent’s financial affairs are resolved and the remainder of the estate is distributed according to the law.
In most cases, the court will successfully be able to appoint an administrator whom he deems most suitable, according to priority (eg. surviving spouse then surviving children then surviving parents etc). Those lower in the ranking may apply to be administrator; however, but only if those higher renounce their rights.
This ofren leads delays and unpleasant family disputes in cases where beneficiaries cannot agree on whom the appropriate administrator should be.
Fact #2
Your family needs to find 2 trusted and qualified individuals to be sureties
In the case where there are beneficiaries below 21, the Court may require the administrator to find 2 individuals who are willing to execute a bond to secure the administration of the estate. In layman’s terms, these 2 individuals need to agree to act like a “guarantor” to ensure that the administrator does his duty properly and faithfully.
Each surety needs to have assets which is equivalent to the size of the deceased gross estate.
For example, if Mr A passes away and leaves behind a minor child and a total gross estate of $5M, the Court will need two individuals who has a net worth of $5M each to be a surety and to ensure that the administrator will properly manage the estate and accounts.
In this day and age, an estate size of a few million is not uncommon, especially with insurance proceeds. However, to find two individuals with an equivalent net worth and who would be willing to be a surety can often be difficult and cause delays in the administration of the estate.
Fact #3
Your parents are automatically disqualified from inheritance once you start a family
Many couples with children are unaware that, if they die intestate, their own parents do not get any share of their estate.
This can be an unpleasant surprise for the decedent’s parents especially if they were financially dependent on the decedent while he was alive.
Fact #4
Stepchildren do not automatically qualify as a beneficiary
Remarriages and having stepchildren are getting more common nowadays. However, sone may not be aware that when a person dies intestate, their stepchildren do not receive anything from their estate.
This can cause potential problems especially if stepchildren have been dependant on their step-parents for maintenance and living expenses.
Conversely, if the grown up stepchildren have been looking after their stepparents during their retirement, only to learn after their parents demise, that no assets were left for them, it could also lead to displeasure or tension in the family which could have been avoided.
Fact #5
Your assets may end up going to unintended parties in the event of a common disaster
With more couples and families traveling together, common disasters can happen, though very unlikely. In such events, the older is deemed to have passed on first, hence passing on his/her assets to the younger person, which will then be distributed to his/her estate.
Without proper planning, in some scenarios, this can lead to most of the deceased assets going to the other set of relatives.
The above 5 scenarios are just some of the reasons why you should consider writing or reviewing an existing will.
If you would like some estate planning advice, I would be most glad to sit down with you to discuss more.
Would like to add that even thou the court requires 2 sureties, you may apply to dispense with sureties which in most cases, are granted by the court. This only applies if minors are involves and etc.
Nowadays, if straight forward cases, there is no more a need to apply leave with Court to dispensation of sureties.