Failing to create an estate plan can be a risky proposition. Leaving your legacy to your state's intestacy laws creates a possibility that your wealth will be distributed in a way that's different than you would have wanted. Leaving behind no plan also opens the door to risks like estate litigation from people claiming to be your legal heirs. With a complete plan that includes a will or a will and living trust, you can make certain that your specific and personal objectives are made clear in valid legal documents.
In February 2015, an Iowa grandmother named Christine passed away at a hospital in Des Moines. According to her obituary, Christine was survived by two children, two grandchildren, one great-grandchild and “her husband of 23 years, Mike.” Like a lot of people (too many, to be truthful,) Christine died with no estate plan in place. That meant that Christine's estate would go through Iowa's probate system and be distributed according to Iowa's intestacy laws.
Christine's daughter asked the probate court to name her as the administrator of her mother's estate. In her court papers, the daughter asserted that she and her brother were Christine's only heirs at law. Sometime after that, Mike entered the case. He asked the court to remove the daughter. The daughter fought against this removal, arguing that Mike had no legal standing to ask the court to do anything in Christine's estate. You see, Christine and Mike never obtained a marriage license. Mike's claim was that he and Christine were common-law spouses, which the daughter argued against.
Several states have passed laws eliminating the recognition of common-law marriage within their borders, but Iowa isn't one of them. In Iowa, a common-law marriage occurs when two people agree that they are married, cohabitate continuously as partners, and act like a married couple in public. If Mike met all of the legal standards for a common-law spouse in Iowa, then he potentially was Christine's legal husband and entitled a full spousal share under the intestacy laws. Following Iowa's intestacy rules, that would have meant Mike received one-half of Christine's assets and Christine's two kids split the other half.
The probate court ruled for the daughter, concluding that Mike had not proven that he qualified as Christine's common-law husband. Mike appealed but, during the appeal process, he surrendered the argument that he and Christine were common-law spouses. Without possibly qualifying as Christine's common-law spouse, Mike was what's called a “legal stranger” to Christine and not entitled to request the daughter's removal and not entitled to receive anything from Christine's estate.
This protracted litigation points several different ways that intestacy can be problematic and reasons why you need an estate plan. First, Christine's lack of a plan either frustrated her goals or else needlessly cost her family time, money and stress. Perhaps Mike was a trusted and beloved partner to Christine for many, many years. If that were true, it seems possible that Christine might want to remember him in her estate. By creating neither a will or trust, Christine ended up leaving Mike nothing. On the other hand, perhaps Christine's objectives were for all of her assets to go to her two children. If she had put an estate plan in place, it is possible that her family could have avoided the prolonged litigation that ensued over her estate.
A second reason is specific to states, like Iowa, that recognize common-law marriage. If you have a committed partner whom you've never married, and live in a state that recognizes common-law marriages, it is important to realize that your partner might possibly qualify as your common-law spouse. If that's true, then your partner may have certain spousal rights regarding your estate. An experienced estate planning attorney can help you understand what your rights and obligations are, and develop an estate plan that meshes these obligations with your estate planning goals.