From time to time, we meet clients who think they understand estate planning, but in reality, they are misinformed. In this blog series, we'll take a look at a few common misconceptions we hear and set the record straight regarding estate planning in Georgia.
Misconception #1: “If I don't have my own estate plan, the state will give everything to my spouse.”
From time to time, we meet clients who aren't convinced that they need an estate plan. They are happy to bypass doing their own estate planning and adopt what they think is the state's default plan as their own. However, the above statement is actually far from the truth of Georgia's laws of intestate succession—or, in laymen's terms, what happens when you die without a Will.
If you die without any plans in place, Georgia law will dictate how your assets are distributed. While your heirs under Georgia law will be the ones to inherit your estate, the distribution likely doesn't happen the way you assume. Contrary to common belief, a spouse does not automatically inherit everything if the deceased has surviving children. At this point, you may assume that the estate is equally distributed between the spouse and children, but this again is not quite correct.
After paying the deceased's creditors, the assets in the estate are in fact split between the spouse and children. Under Georgia laws for intestate succession, a surviving spouse can inherit no less than one-third of the estate. So, if the deceased had two or more children, the spouse would inherit 1/3 and the remaining two-thirds is then split evenly among the children. If you die with a spouse and two children, each of them would inherit an equal one-third share of your assets. However, if you die with a spouse and more than two children, your spouse will inherit a third of the estate, and if you have…
- 3 children, they will each inherit 2/9
- 4 children, they will each inherit 1/6
- 5 children, they will each inherit 2/15
…and so on.
If you have a spouse and one child, they will each inherit 50% of your assets, after creditors have been paid.
This often comes as a shock to those who thought they were content with the state governing the distribution of their assets. Consider how this distribution plan would affect your loved ones. Could your spouse live comfortably on one-third of your estate? Is a fraction of two-thirds of your assets what you want to leave to your children? Furthermore, this plan could bypass friends, charities, or others who are not your heirs under the law who you would like to inherit. If this plan does not follow your wishes, you must have your own estate plan in place with a valid Will or other planning tool.
This blog is part of a series on common estate planning misconceptions. Click the links below to learn more.