Q If I don’t do an estate plan, won’t my assets just transfer to my spouse and children anyway?
The short answer is yes. However, they may not go to the people and in the manner you prefer. If you pass away without a written estate plan (known as “intestate”), the State of Minnesota will decide who is in charge of your affairs, who should receive your assets, in what amounts and in what manner. This process is known as probate. None of these may be what you would have wanted or intended.
If you pass away without a written estate plan, assets will only be distributed after the Court appoints a personal representative and only in connection with a formal probate proceeding. The personal representative can be anyone with an interest in your affairs. Although a family member is most likely to be appointed, your bank, credit card company or others could petition the court to be appointed. Also, a family member who you would not want to act as your personal representative could also petition the Court. If you have minor children, the Court will appoint a guardian for the children and a conservator to manage their assets and they will most likely receive those assets outright and unprotected at the age of 18. If your children are not minors, they will receive an outright distribution of their share of your estate unprotected and regardless of whether or not they have the ability to manage what they receive from you. If you have a child or grandchild with a disability, their inheritance from you could cause them to lose needed government benefits. In the event you are married at the time of your passing and have children from a prior relationship, a portion of your estate will be given to your spouse and another portion will be immediately given to your children.
In short, if you pass away without a written estate plan, the State of Minnesota has a plan for you. It is known as probate. The probate court will decide who is in charge of your affairs, who receives your assets, when they receive those assets, the process takes on average 12-16 months, costs on average 3%-5% or more of your estate, and is completely public. Whether you choose to use a will or a trust as your written plan, dying without a written estate plan should be avoided if it all possible.