10/23/2016

Dying Intestate

If you don’t have an estate plan, the state has one for you, known as the Laws of Intestacy.  In Virginia that is codified in the Virginia Code under the Descent and Distribution section of the chapter on Wills and Decedent’s Estate.

 There are two key matters, what assets pass by the laws of intestacy, and to whom do the assets pass when there is no will to direct the distribution?

  • Only assets that would have passed by will can pass by the laws of intestacy, i.e. property owned solely by the decedent in his/her sole name.  It may be easier to define what does not pass by intestacy: assets owned jointly with right of survivorship; assets controlled by beneficiary designation such as retirement accounts, annuities and life insurance; accounts subject to pay-on-death or transfer-on-death designations; property controlled by a transfer-on-death deed and property that has been transferred to a revocable trust.
  • Most simply stated, your property will pass to your closest relatives, beginning with your spouse, then children, then parents and then siblings. 

 As with most legal things, it’s never simple!  If you die with a spouse and two children, the spouse will inherit everything, as long as both of the children are descendants of both spouses.  If one is your child from a previous relationship, the spouse will inherit one-third, and the surviving children will take the rest.  If you die without a spouse and with children, the children inherit everything in equal shares.  But if you die with no spouse, and with a child and a deceased child who has surviving children, you child will inherit one half, and the grandchildren will share the deceased child’s share. 

 In the case of a divorce, state law treats the surviving ex-spouse as having predeceased the decedent, breaking any right of inheritance.  However, under the federal law that controls who inherits a qualified retirement plan, such as a 401(k), 4039b) or TSP, ex-spouse does not mean ex-beneficiary!  The Supreme Court ruled in 2001 in the Egelhoff case, that the last beneficiary designation prevails according to federal law, and further that federal law preempts state law.  As a result, Egelhoff’s ex-wife, and not his children, received his 401(k).

And what about adopted or foster children, or a child you gave up for adoption? A child you formally adopted will inherit just as a natural born child would.  Foster children and stepchildren not formally adopted will not inherit.  A child you placed for adoption who has been adopted by another person no longer has a family relationship to you and will not be your heir.

If you fathered a child while not married to the child’s mother, the child may inherit from you under specific circumstances: (1) you participated in a marriage ceremony that later turned out to be void; (2) your paternity was established “by clear and convincing evidence” under Virginia law.

 Miscellaneous other factors under the Virginia intestacy laws:

  • To inherit under Virginia’s intestate succession statutes, a person must outlive you by 120 hours.
  •  “Half” relatives inherit only half as much as they would if they were “whole.”
  • Relatives conceived before, but born after you die inherit as if they had been born while you were alive.
  • Relatives entitled to an intestate share of your property will inherit whether or not they are citizens or legally in the United States.
  • If you die without a will and without any surviving relatives, ultimately your estate should escheate to the state’s treasury.  However, it is rare that happens, especially in Virginia which recognizes the “laughing heir”, a relation so remote from the decedent as to have no bereavement because of the death.  Most other states stop at the third generation, the level of the grandparents, when seeking heirs.

DOMINION LAW GROUP LLP 20 W. Market St., Leesburg, VA 20176