No Last Will & Testament? Read this Horror Story!

About thirty years ago, a widow came to me after her husband died suddenly.  He basically had a great income, a very nice home with a large mortgage and a $1 million life insurance policy.  Unfortunately, he did not have a will and the beneficiary of the life insurance policy was his estate…meaning the proceeds passed through probate based on intestate laws.  The court appointed a lawyer as guardian ad litem for their ten-year-old child.  As a result, the widow received $550,000 cash and the home with a big mortgage.  The child’s share was $450,000, which the attorney invested in CDs and let the earnings accumulate instead of letting it be used to benefit the child.  The widow’s income from the CDs was not enough to pay the bills, mortgage and private school so she had to sell the home and get a low-paying job because she had been out of the workforce for more than ten years.  When the child turned age 19 (considered legally an ‘adult’ in Alabama), he received his $450,000 plus all the earnings outright.  You might guess how well that played out…not well!

It is estimated that 55% of adults in America do not have a will.  If you die without a will, you are said to have died ‘intestate’.  This means that where your ‘stuff’ goes is determined by the laws of the state in which you reside unless it will transfer by beneficiary designation or under some form of joint title.  For many people the result would not be what you wished.  Before reading further, stop for a moment and make a list of all of your assets such as bank accounts, personal investment accounts, real estate, retirement accounts and property such as cars, boats, furnishings, jewelry, etc.  Next to each item on your list, make a note of who it would go to at your death and whether it would get there by a beneficiary designation, a joint title or through the probate system.

Be careful when trusting your memory.  I cannot tell you the number of times a client has been “certain” of a beneficiary designation or joint title only to find out they were wrong once we reviewed the actual documents.  When considering beneficiary designations, be especially careful of the “contingent” beneficiary.  The contingent beneficiary is the beneficiary who steps up should your primary beneficiary predecease you.  We often find that the contingent beneficiary is left blank.  In such cases, it is assumed that the contingent beneficiary is your estate…meaning the assets will pass to your heirs via the probate process.  And if there is no will, that means according to the intestate laws of your state of residence.  Also, you want to be mindful of joint title to real estate because if the joint titleholder predeceases you, then at your death, the real estate will also pass through probate.

Now let’s look at a few common scenarios of what happens to the probate estate when someone dies without a will.  For this discussion, I’ll assume the State of Alabama is the state of residence.

  • Married, no children or parents living.  If it’s just you and your spouse, 100% goes outright to your spouse.
  • Married, no children, one or both parents living.  Here, your spouse will receive the first $100,000 of assets plus one-half the balance.  The remainder goes to the surviving parent(s).
  • Married with children.  If you have children, the state dictates that the first $50,000 goes to the surviving spouse plus one-half of the remainder.  The balance goes outright to the children.  Note that if the children are minors, they cannot receive property outright and, generally, the probate court judge will appoint someone as the “guardian-ad-litem” (something like a financial custodian) to oversee the money for the benefit of the child or children.  While you may assume your surviving spouse would manage the money for your children, there is no assurance of this since it’s up to the court’s discretion.  Don’t forget, a guardian-ad-litem gets paid from your assets!
  • Unmarried, no children but one or more parents living.  If you are not married and have no children, then 100% of your probate estate will go to your parents equally.
  • Unmarried, with children.  If you are unmarried and have children, then 100% of your probate estate will pass equally to your living children.  Note that if any of them are minors, the same rules regarding the guardian-ad-litem apply.
  • Unmarried, without children or surviving parents.  In this case, your probate assets will go to your siblings, equally.

There are other provisions that track down remaining next of kin if none of the above circumstances apply.  If there are no next of kin, your money goes to the State of Alabama!  Alabama also has a provision that states that if a potential heir dies within five days of your death, that person is deemed to have predeceased you.

The moral of my story is that having a valid will is very important for every adult.  Intestate laws vary by state.  For a state-by-state guide, visit; click on ‘Resource Center’; then ‘Links’; then “Intestate Succession Laws- State by State”.  Your best choice is to consult with an attorney who is skilled in wills and estates.

Save the Date.  Want free financial advice from experts?  Attend the Alabama Money Expo March 7, Carver High School.  Visit