Article written by Stephen M. Watson, Esq.
For clients who are married, most often they want their assets to go something like this:
First, to the surviving spouse;
Second, to the children, and further descendants (grandchildren, great-grandchildren, and so on).
After that, some want their estate to go to brothers and sisters; some want it to go straight to nieces and nephews; and some want it to go to their church or other charity of choice.
Another way of looking at this is that most clients want their property to go to the surviving spouse, but after that they want their assets to stay in the bloodline (children and other descendants, and then to other extended family members).
So, what happens to those who don’t have a plan?
Many clients that think that if they die without a Will, that if no marching orders are left behind, everything will go to the state.
Well, no. Instead, when a Virginia resident dies leaving property behind that has nowhere to go—no Will, no beneficiary designation, no joint ownership—then we must rely on Virginia law to dictate where the property goes.
This body of Virginia law is known as the Law of Intestacy.
Think of it this way: If you die with a Will, then you are said to have died Testate. But if you have no Will, and no other plan for the asset (beneficiary designation, for instance), then you are said to have died Intestate, and that property must go through a court process called probate. The probate process will turn to the Law of Intestacy to determine where the property goes.
The Law of Intestacy contains a list, or a hierarchy, of who gets our property when we have left no instructions.
Right now, in 2018, when someone dies in Virginia without a Will or other directive, the list looks like this:
First: All to the Surviving Spouse, but only if all surviving children of the deceased are also the children of that spouse. If the deceased left behind any surviving children (or grandchildren, great-grandchildren, etc.) who are not the children of the surviving spouse, then the surviving spouse gets only one-third, and the remaining two-thirds go to the deceased’s children.
Second: If there is no Surviving Spouse, then all goes to the deceased’s surviving children and their descendants.
Third: If no children or descendants, then all goes to the deceased’s parents, or surviving parent.
Fourth: If neither parent is living, then all goes to the deceased’s brothers and sisters, and their descendants (the deceased’s nieces and nephews).
The Code then stretches out even further in search of a “next of kin,” and if there simply are no takers, then it goes to the state.
An interesting point about our current Law of Intestacy is that the spouse is number one on the list. It was not always this way. In fact, given how long Virginia law has been in existence, the spouse has been in the number one position for only a short time. When did the spouse take this number one position? July 1, 1982.
Before July 1, 1982, it was generally the children who took the number one spot. In fact, prior to 1956 the spouse was at the number four level, and in that year jumped to number two.
As discussed above, having the spouse in the number one position probably reflects what most clients would want for their own property. But for property that has been inherited from Mom and Dad, the Law of Intestacy can have unintended consequences.
Consider married clients who draft Wills leaving everything to each other, and then all to their daughter, their only child. Under this plan, all will end up going to the one child. That daughter becomes the owner of the property. It’s hers.
The daughter is married and has one son (the grandson of the clients), and that grandson is the son of the daughter and her husband (the clients’ son-in-law).
What happens to all the daughter’s property (including the property left to her by Mom and Dad) when she dies? Who is first on the list if she dies intestate?
But wait a minute, cry the clients. We want our property to go to our grandson!
Too late. When the clients left their property to their daughter by Will, beneficiary designation, or joint ownership (think joint bank accounts), then it became her property. It’s hers. She owns it. And under the Virginia Law of Intestacy, all her property (which now includes anything left to her by Mom and Dad) goes to the daughter’s husband.
But what if he remarries?
Who’s first on the list?
Yes, that property left to the daughter went to her husband when she died. And while he was alive he stuck it all in a joint bank account with his new wife. And when he died, everything went to the new wife. She can do whatever she wants with it. It’s up to her if she wants to leave anything to your clients’ grandson (her stepson).
Our current Law of Intestacy does not have the emphasis on the bloodline that it used to, and with the spouse being in the number one position, there is no guarantee that your property will stay in your bloodline.
How do I keep my property in my bloodline?
That, my friend, is why I do a lot of trusts.