Estate Planning: Testate Vs Intestate Inheritance Process

Estate and probate law governs how an individual’s assets are distributed post-mortem. The assets of a decedent (passed individual) who died with a legitimate will enter what’s called the testate inheritance process - their assets will be distributed according to the instructions contained in the will.

On the other hand, a decedent who passed without a will is considered to have died intestate and their assets will be distributed according to Florida intestacy laws. 

Continue reading to learn the basic information about these estate principles and become familiar with the testate vs intestate inheritance process. 

Testate Inheritance Process

With testate succession, as we already mentioned, someone died with a valid will. To be valid in the Sunshine State, the will must be signed in front of two witnesses. In other words, the basic will doesn’t need to be notarized for it to be valid. 

Upon the death of the testator, the assets left behind will be known as the estate. Generally speaking, the assets will be distributed as such:

• Funds are set aside for attorney’s fees and management of the estate
• Personal representative (individual handling the estate) pays any due debts, such as contracts and assets using the funds in the estate
• The remaining assets are distributed to heirs in accordance with the terms of the will
  
  

Do Heirs Inherit Liabilities?

No. Liabilities never transfer through an estate. This means that you can’t inherit the debts even if you inherit the property. 

That isn’t to say debts have no impact on the inheritance. Most commonly, liabilities transfer with property. If the decedent owed taxes or a mortgage on the home that you inherited, you’re required to take on the debts.

Liabilities may also reduce the inheritance. For instance, if the decedent left you $100k but had $40k in debts, you’d receive the amount left over after all debts are covered. If those debts exceed the net value of the estate, it means that the decedent passed away insolvent, leaving their heir with practically nothing. 

Do Wills Have Limits?

The biggest point in the testate vs intestate debate is the fact that an individual can use the will to distribute assets as they wish. While many wrongly believe the family has automatic rights when it comes to inheritance, a valid will always take precedence over intestacy laws (there are exceptions we’ll cover later).

To put it differently, if a property transfer is legal while the individual is alive, they can also make the exact same transfer after their death through the use of a will.

Furthermore, wills also allow for distribution of almost all assets including, personal property, money or investment accounts, real property, intellectual properties, and so on. You can also order heirs to sell certain assets, and so on. 

What Are The Exceptions To Testate Inheritance?

There are two notable exceptions to testate inheritance:

• Marital Assets: if the decedent was married at the time of their death, some of their assets will likely fall under marital assets. In other words, they belong to both spouses and can’t be transferred until both spouses have passed away. 
  
  
• Evasion: A common form of tax fraud is transferring assets before death to avoid paying the debts. Under the law, those transfers are unwound and the assets will be signed back to the estate. 

Intestate Inheritance Process

As stated earlier, dying without a will or leaving a will that was deemed unenforceable will kickstart the intestate inheritance process. The key difference between the testate vs intestate process is that the latter is governed by state law and the assets will be distributed according to the laws of inheritance. 

These estates go through probate court and the process is pretty much similar:

The attorneys are paid, followed by covering any liabilities or administrative fees and only then will the assets be distributed to the legal heirs.

In Florida, all probate courts will distribute assets based on closeness. Close relatives take precedence over distant relatives in the overall ties of inheritance. In most cases, the inheritance order is as follows:

• Spouse
• Legal descendants (children)
• Parents
• Siblings
• Grandparents
• First cousins, nephews, aunts and uncles

Each category of the heir inherits the estate in total, which is further divided into pro-rata shares among the rest of the heirs. What does this mean?

Let’s say an individual died without leaving a will with no children or spouse. If their parents have passed away and the individual only has two brothers and multiple uncles and aunts, the two siblings will inherit half of the estate with nothing going to the other family members. 

What Are The Exceptions To Intestate Inheritance?

The largest exception to the intestate estate process is the spouses. Even though the surviving spouse automatically inherits all non-marital assets, there are exceptions when it comes to descendants and parents. This helps circumvent issues that involve children that are unrelated to the surviving spouse. 

Although first cousins are the farthest family that can inherit intestate assets, if the decedent had no other family members, cousins may inherit their estates. 

But what happens if the deceased had no family? In that case, the assets will be transferred to the state where the decedent passed away.

Start Thinking About The Future

If you pass away without a valid will your estate will be distributed according to intestacy laws. While these laws are effective, they may not be enough to account for intricate family dynamics that may surface in the future. 

This is why you should have an effective state plan in place. 

Not only does an estate plan erase the testate vs intestate conundrum, but it also allows you to preserve as many assets as possible through the use of different legal tools such as trusts. That way, you can erase the possibility of your heirs losing money as a result of estate taxes and other debts. 

To create an effective estate plan, reach out to Doane & Doane. We’ve spent the last two decades honing our craft and delivering premier estate planning services to the citizens of Florida. With us taking care of the proceedings, you can rest assured that your matters will be properly handled once you’re no longer around and that your beneficiaries won’t have to deal with complex inheritance issues.

Call 561-656-0200 or fill out our contact form to schedule an appointment.

Note: 

The information in this blog post is for reference only and not legal advice. As such, you should not make legal decisions based on the information in this blog post. Moreover, there is no lawyer-client relationship resulting from this blog post, nor should any such relationship be implied. If you need legal counsel, please consult a lawyer licensed to practice in your jurisdiction.