One of the most misunderstood aspects of estate planning is what happens if you die without having prepared an estate plan. A surprising number of people think their assets will be claimed by the state. In fact, each state has statutes that define who is to receive your assets if you die without a plan.  These rules are known as the laws of intestate succession. Unfortunately, they vary by state and often are different than how many people would choose to leave their assets. 

In Michigan, the rules are straightforward when you die without a spouse.  If you have descendants (children or grandchildren), the assets will pass 100% to them.  If you do not have descendants but either of your parents survive, then 100% of your assets will pass to parents, if no decedents or parents then 100% of your assets will pass to your siblings. These results are often consistent with how most people would draft their documents. 

Where results differ significantly from the typical plan is when a spouse survives and there are surviving children or parents. For 2024, under Michigan law, if a spouse survives with children from the current marriage, the first $273,000 (amount increases annually for inflation) plus ½ of the remaining probate estate passes to the spouse and the children inherit the remaining balance.  If either spouse has descendants from a prior marriage, the 2024, the extra carve out for spouse is reduced to $182,000 but the balance that passes to children after the spousal amount remains ½ of the assets. If a spouse survives, without any children, but either of the deceased's parents survive, the first $273,000 plus ¾ of the balance will pass to the spouse and the balance will pass to the deceased's parents. Remember, these rules only apply to assets that will pass through probate and the rules vary by state. 

Having a well-designed estate plan that addresses the unique needs of your personal situation is one of the pillars of addressing your financial affairs. For many, having to consider your own mortality is a difficult process.  Sometimes potential issues solve themselves and procrastination turns out not to be a bad thing. Death is inevitable and you owe it to your family to continually address this important part of your financial situation.