Death Without a Will or Trust
This is part 4 of our Blog Series, titled Death Without a Will or Trust.
Note: This article is written based upon current Texas law. Other States have similar provisions, but the details may vary slightly from State to State. Check with a local attorney specializing in Wills, Trusts, and Estates for your specific State laws.
Previously, we discussed what happened when a single person, that was never married, died without a will. Next, we discussed the widowed person that died with children. Then, we learned about the kinds of property that a married person owns at death: community property and separate property. Now that you have that understanding, we will discuss what happens when someone who is married dies without a Will.
The JOHN and MARY STORY
John and Mary have been married for 15 years, with 2 children, Holly and Jim. When John died; he did not have a Will. At his death, he and Mary owned the following property:
- A home bought by John and Mary after they were married;
- A car bought by John and Mary after they were married;
- A bank account worth $750,000.00 in which John and Mary deposit their salaries.
- Stock worth $200,000.00 inherited by John from his parents; and
- A lot owned by John before they were married.
COMMUNITY PROPERTY – TO MARY
You will recall that community property is simply whatever is earned during the marriage, and whatever is bought with those earnings. You may have already picked out thecommunity property in our example: John and Mary’s house, car and bank account.
In Texas, the home, car and bank account pass 100% to Mary and none to Holly and Jim. That is because Holly and Jim are John’s AND Mary’s children. Even if John and Mary had no children, Mary still receives all of the property.
NOW for the EXCEPTIONS!
If John had even one child from another marriage, then his ½ of the community propertypasses to his children in equal shares and none to Mary! That means Mary would only keep $375,000.00 (her ½ of the $750,000.00 bank account): all of his children would equally split the other $375,000.00.
It also means that Mary would only own ½ of their home, and the children would have equal shares in the other ½! Imagine dealing with the other child’s mother (ex-wife)! In addition, because minor children cannot own property, the Court may need to establish a guardianship! That is an expensive process that we will delve into in a future article.
SEPARATE PROPERTY IS DIFFERENT
To complicate things further, the separate property (the stock and the lot) pass under different rules if someone dies without a Will! John’s stock – which he inherited – and the lot – which he owned before the marriage to Mary – are his separate property because of the manner in which they were obtained.
Separate personal property in Texas goes 2/3 to children, whether there is 1 child or 10 and 1/3 to the surviving spouse. Holly and Jim get 2/3 of the stock and Mary gets 1/3. If John had no children, the stock would all go to Mary.
SEPARATE REAL ESTATE IS REALLY DIFFERENT!
The lot, however, is even more complicated! John’s children, again whether there is 1 child or 10, get equal shares of it all, subject only to a 1/3 “life estate” which is all Mary receives! Note how different that is than the community property home, where Mary gets either half of the home, if she is not the mother of all of John’s children, or the entire home if she is!
If John had no children, then Mary would get ½ of the lot, and the other ½ would go to John’s family. Only if John had no living parents or living descendants of his parents would the lot go 100% to Mary.
DON’T RISK IT!
As you can see without a Will, things can get very complicated! Where property goes on the death of a married person, who does not have a Will, depends on many factors: is it community or separate property, is it real estate, are there children and who is the surviving parent of each child, and are there other relatives surviving.
Even then, there is nothing automatic about it: action needs to be taken to get the property wherever it goes! Don’t depend on the State of Texas to determine where the property goes, and how to get it there! See a lawyer to plan where your property goes!
This is not a do-it-yourself project! There are nuances and peculiarities of property ownership that we can’t get into in this simplified discussion. Be sure to see a lawyer to help you navigate the transfer of your property on your death according to your wishes.