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The Survivor Takes All… NOT ALWAYS

Posted by Mary R. LaSota, Esquire in Estate Plan, Will | 0 comments

Married without a Will in Pennsylvania? Do you think your surviving spouse will inherit everything? Think Again. For those assets that are not disposed of by Will, or by a beneficiary designation (i.e., 401(k), insurance proceeds, IRA) or by survivorship rights (i.e., tenancy by the entirety, joint tenancy with right of survivorship), Pennsylvania’s intestate law may determine the person who will receives those assets.  I use the word may, instead of shall because if the asset is an employee defined benefits plan governed by  ERISA rules, those rules will determine the beneficiary, and that is a conversation for another time.

For many married individuals, this may not be an issue because all of your assets are either titled jointly as tenancy by the entirety or joint tenancy with right of survivorship or your spouse is the primary beneficiary of your retirement benefits. Good for you, you may not have an issue under Pennsylvania’s intestate laws.  But, what if you are the sole owner of real estate? Or what if you own a business? Or what if you forgot to update your beneficiary designations? Or what if you are the sole owner of bank accounts or brokerage accounts? Ooops… without a Will your spouse may not inherit those assets.

Say Whaaat?

Yep, that is right… many states, including Pennsylvania, have laws called “intestate laws” that determine who receives your assets and the amount that those people receive.  So for example, if you are married, your surviving spouse does not receive all of your assets. Instead, the intestate amount may be divided between your spouse and your descendants or your spouse and your surviving parents.

Let’s take a look at the diagram below…

Vector-Smart-Object

Take a look at the first branch of the chart, the entire intestate estate.   If there are no surviving parents of the deceased spouse and there are no surviving descendants, then the surviving spouse will inherit the entire intestate estate.  A descendant is a person that is direct line to an ancestor, think children, grandchildren, great grandchildren and on forever.

Now lets look at the middle branch, $30,000 + 1/2 of the intestate estate.   If there are descendants that belong to both the deceased spouse and the surviving spouse, then those descendants are entitled to 1/2 of the remaining intestate estate.  The surviving spouse will receive the first $30,000 of the intestate estate and 1/2 of the balance.  If there are no descendants, but there are surviving parents of the deceased spouse, then the surviving parents will receive 1/2 of the remaining intestate estate.

In the last branch, 1/2 of the intestate estate, if there are descendants and those descendants are only directly in line to the deceased spouse and not directly in line to the surviving spouse, then the surviving spouse will only receive 1/2 of the intestate estate.  The remaining intestate estate will go to those descendants of the deceased spouse.

As you can see the surviving spouse does not alway take all.  This is why it is vitally important to have a Last Will, and to make sure your you keep your Will updated.

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