Does the Government Receive my Property if I Die Without A Will?
The short answer is no. There are some extraordinary situations in which the government may take all or some of an estate, but in the vast majority of cases the government does not receive any property from someone who dies without a will.
Every state has rules to determine who shall receive property if the owner dies without a will. These rules are called the rules of intestate succession. Arizona’s rules of intestate succession are located at A.R.S. §§ 14-2102 and 14-2103. The rules of intestate succession are not always easy to determine. In most cases the rules are complicated by second marriages, community property rights, jointly held property, or beneficiary designations, among other reasons. Below is a list for who receives property if the owner dies without a will. This list is not perfect for all situations, but is presented just as a general outline of the rules.
- Surviving spouse (100% if all of the decedent’s children also belong to the surviving spouse, 50% if any child has a different parent);
- The decedent’s children (100% if there is no surviving spouse, or 50% if any children have a parent who is not the decedent or the surviving spouse)
- The decedent’s grandchildren, great-grandchildren, etc., if there are no children or if a child or grandchild predeceased the decedent;
- To the decedent’s parents, if no one listed in number 1-3 survives the decedent;
- To the decedent’s parents’ heirs, such as the siblings, nieces, or nephews of the decedent;
- To the decedent’s grandparents, or their heirs, if no one listed in numbers 1-5 survives the decedent.
- The State of Arizona, if no one listed in numbers 1-6 survives the decedent.
As shown in this list, the government only receives the property of a person who dies without a will if there is no living family. In all of my cases we have found extended family. I have yet to encounter a case in which the person who died did not leave a will and did not have any family. Of course, any person can alter the list above by simply making a will that leaves property to whomever the owner wishes, thus avoiding the intestate succession rules.
There are some other ways in which the government may receive all or some of an estate, however. For large estates there is federal estate tax. Estates larger than $5.25 million (for 2013) are subject to federal estate tax. Married couples often can double this amount and pass $10.5 million worth of property without any federal estate tax. Arizona does not have a state estate tax or a state inheritance tax, so unless an estate is quite large, there should not be any estate taxes due upon the death of an owner. For smaller estates the government may have a claim to the estate if the government provided health care to the decedent before his or her death, such as through the Arizona Long Term Care System (ALTCS). ALTCS liens against the home of the decedent are not uncommon, and sometimes lead to the government receiving property of a decedent.
Finally, one common problem I encounter is property being left to the government because no one in the family knows the asset exists. The financial institution holding the asset may hold the funds for several years until it becomes aware that the owner has died. If the financial institution is unable to contact the owner’s family, the account will then be transferred to Arizona’s Unclaimed Property Department. The Unclaimed Property Department lists assets on its website that are waiting for claimants. Those assets will be transferred to the State of Arizona if no one makes a timely claim for the assets.
In summary, it is highly unusual for an estate to pass to the government. Proper planning can further reduce this possibility. A simple will bypasses the rules of intestate succession, and preparing an estate plan is useful to notify family or friends of assets, thus reducing the risk assets may pass to the government through the Unclaimed Property Department.
The information listed above is just a general outline that has been simplified for this article. There are many exceptions to these rules, and the facts of your case may not fit neatly into the description above. Please feel free to contact me if you wish to discuss your particular probate issue.