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When someone dies without a will, the laws of the state where that person dies will determine how their assets are distributed. These laws can vary by state. The New Jersey laws that determine how someone’s assets are distributed in the event they perish without a will are called “intestate” laws. When this situation occurs, some assets won’t go through the intestate system if they aren’t wholly owned by the deceased or have a previously named beneficiary.  Some property will pass down to the deceased’s family in a specific order based on which relatives of the deceased person are alive at the time of their death.

Sound confusing? It often is. Passing one’s assets down without a will can cause the family of the deceased a great deal of unnecessary issues and unintended effects. The best way to avoid all of this is work with an attorney who can ensure that one’s estate is distributed according to their wishes and not an overly complicated system designed by the state. Keep reading to see exactly how a person’s assets will be distributed if they die without creating an estate plan. 

Certain Property Will Not Be Distributed Through the Intestate Laws

Not all property owned by a person when they die will automatically pass through the state intestate laws. There are certain kinds of property that avoid this process, usually because the nature of this property requires that the owner of it to name a beneficiary to receive the asset when the property is initially acquired.  Assets that don’t go through intestate succession include:

• Property transferred to a living trust: This property is now owned by the trust and not the deceased, so it will not change hands after they die.
• Life insurance proceeds: The deceased names a beneficiary when the policy is initially acquired, and that beneficiary receives the benefits when the policyholder dies, regardless of intestate laws or other documents like a will. 
• Funds in an IRA, 401(k), or other retirement account: These will go to the named beneficiary when the owner of the account dies. 
• Securities held in a transfer-on-death account: As the name suggests, these transfer to a previously named beneficiary upon death. 
• Payable-on-death bank accounts: These require the deceased to choose a beneficiary when they are created, and the funds will pay out to them regardless of intestate laws or their will. 
• Property the deceased owned with someone else in joint tenancy or tenancy by the entirety. These pass automatically to the other owners of the property. 

Determining which assets will pass automatically to named beneficiaries upon one’s death can be complicated. An experienced attorney will be able to review an individual’s entire financial situation to make sure that each asset will be distributed to their intended beneficiary.

Property Passes to Relatives Based On Who Is Alive at the Time of Death

When a person dies without a will, state intestate laws will determine who receives what portion of their assets. In New Jersey, priority is given to the closest relatives of the deceased based on a branch system. In other words, the spouse and direct descendants  (children, grandchildren, and so on) are considered first. If none of these people are alive at the time of the person’s death, then the next branch is considered: parents, siblings, and sibling’s descendants. The final branch is grandparents, aunts and uncles, and descendants of aunts and uncles. Finally, unadopted stepchildren get a chance to inherit before the deceased’s possessions and assets, otherwise known as their estate, go to the state. Below, each category is explained in detail and in order of priority.  

Living, Current Spouses:

Previous and no-longer-living spouses are not considered by the intestate system. The portion of the estate that will go to a current and living spouse will depend on the deceased’s other living relatives. This table provides an explanation, as well as examples for each scenario.

If the deceased has no current living spouse, then his or her children will get everything. If the deceased and their living spouse only had children through each other, then the children will get nothing. However, if the spouse or deceased had children through a different relationship, first the current spouse is entitled to 25% of the descendant’s estate, but no more than $200,000 and no less than $50,000. Then the remainder of the estate is split in half, with 50% going to the spouse and the other 50% split among the deceased’s children. (Refer to rows three and four of the table for examples.)

It’s important to note that the deceased’s children must be legally recognized as his or her children for this to apply. Some important rules about this: 

• There is no distinction between adopted and biological children. 
• Biological children adopted by someone else will not receive a share unless they were adopted by the deceased’s spouse. 
• Children conceived before death but born after death still receive a share if they survive 120 hours after birth. 
• Children born to the deceased’s wife during their marriage are assumed to be children of the deceased and will receive a share. 
• Children born outside of marriage still receive a share as long as the father acknowledges paternity, or paternity is established under New Jersey law. 
• Foster children or stepchildren who were never adopted aren’t considered children of the deceased under intestate law. 

Grandchildren, Great Grandchildren, and So On:

Grandchildren are entitled to their parent’s share (the deceased’s child’s share) only if that child is not alive to inherit the share themselves, and that inheritance is split equally among the grandkids through that deceased child. This works the same way with great grandchildren, great great grandchildren, etc. 

Example: Bill dies with no will. He has four children, one of whom has passed away. The dead child had three children of his own. These three grandchildren would receive their dead parent’s share to split among themselves.  

Parents: 

Parents will get everything if the deceased has no current spouse or children. If the deceased has a spouse but no children, first the spouse is entitled to 25% of the descendant’s estate, but no more than $200,000 and no less than $50,000. Then 25% of the remaining estate goes to the parents. Each parent will get half of this if both are alive, or all of it if only one parent is surviving. 

Siblings and Sibling’s Descendants: 

If the deceased has no spouse, children, grandchildren, or living parents, then the deceased’s siblings get everything split equally among themselves. If a sibling is dead but has children, then those children (the deceased’s nephews and nieces) will inherit their parent’s share to split among themselves. This rule is the same for great nieces and nephews. Also, New Jersey makes no distinction between half and full siblings. 

Grandparents: 

If the deceased has no spouse, descendants, living parents, siblings, or descendants of siblings, the deceased’s estate goes to their living grandparents, with half going to paternal grandparents and their descendants, and half going to maternal grandparents and their descendants, unless living relatives exist only on one side.

Example: Bill dies as an only child who never married or had children, and whose parents predeceased him.  He has one grandparent and uncle alive on his dad’s side, and three aunts’ alive on his mom’s side. His grandparent would get 50% of his estate, and his three aunts would split the other 50%, while his uncle got nothing.   

Descendants of Grandparents: 

If the deceased has no spouse, descendants, living parents, siblings, descendants of siblings, or living grandparents, then the deceased’s estate passes onto their living grandparent’s children (the deceased’s aunts/uncles). If the grandparent’s children are also no longer living, grandchildren (the deceased’s first cousins) get their deceased parent’s share to split among their siblings. So, all aunts and uncles would get a fair share, with their children taking their share if too they passed away before the deceased. 

Stepchildren and Foster Children:

Finally, if the deceased has no spouse, descendants, living parents, siblings, descendants of siblings, living grandparents, or living descendants of grandparents, then the deceased’s unadopted foster children or stepchildren will split the estate.

The State: 

If the deceased has no spouse, descendants, living parents, siblings, descendants of siblings, living grandparents, living descendants of grandparents, or stepchildren and foster children, then the State of New Jersey will seize the estate. 

Read more about New Jersey’s Transfer Inheritance and Estate Tax.

Conclusion

The many possibilities that can arise depending on which relatives outlive the deceased can result in large portions of one’s estate going to an unintended person. Even worse, if an individual dies without any living relatives, all of their property will go to the State of New Jersey. Nobody wants this outcome, and luckily it is easy to avoid. No matter your age or financial situation, right now is a great time to speak with an experienced estate planning attorney to create a plan for the distribution of your assets upon your passing.

At Rosenblum Law one of our areas of practice is comprehensive estate planning. Contact us today for a free consultation with one of our attorneys to ensure that those who you want to inherit your wealth, will.