A Minnesota Estate Planning Lawyer Discusses Issues Related to Estate Planning a Probate for Unmarried Couples
My prior post discussed the facts of the unique case of Thomas Proehl and James Morrison, a male couple who legally married California before returning to Minnesota. Mr. Proehl died suddenly of a heart attack leaving a combined $250,000 in an insurance policy without a named beneficiary and a solo bank account. So, what's the problem? Well, who is entitled to receive that $250,000 in assets?
If there is no beneficiary stated on a life insurance policy (or retirement account) the institution holding the policy (or funds) will turn to the local probate court for help. Institutions do not want to make these decisions so will hold the funds until a court tells them how to pay them out. So, how does a court know what to do with these funds? There are two ways: 1) check to see if the decedent left instructions (i.e. a will); and 2) look to the state law.
Is there a will?
The first step in the determining how to pay out Mr. Proehl's $250,000 was to see if he had a will. As noted in prior posts, a will is set of instructions on how, and to whom, a decedent wants his/her probatable assets paid out. If Mr. Proehl had drafted a legal will stating that all of his assets were to be paid to Mr. Morrison, a court would have ordered the insurance company and the University of Minnesota to immediately cut a check to Mr. Morrison. Unfortunately, Mr. Proehl did not have a will so the court must now look to the second method of determining how to pay probatable assets.
What Does State Law Say?
If there is no will, the decedent is said to have died "intestate" (literally meaning "not testate"). For someone who died without a will, the probate court will turn to state law to guide it in determining how to pay assets. In Minnesota, the state statute governing the payment of assets where there was no will is known as the law of intestate succession. These statutes provide the court with very clear instruction on the "order of descent" (e.g. priority list) for any assets passing through probate. At the simple level (the point of this post is not provide a lengthy explanation of intestacy succession) assets passing through intestacy are paid in the following order:
To a legal spouse; then
Any legal child(ren); then
To descendant of parent (i.e. sibling); and then
To any living grandparent(s).
If there are more than one in any group (class) then the assets will be divided equally "at that level."
So, first up is the legal spouse and here we immediately have an issue. Mr. Proehl and Mr. Morrison were legally married in California so shouldn't those assets go to Mr. Morrison as the surviving spouse? That is exactly the issue Mr. Morrison brought before the Hennepin County Probate Court last month in which he filed a petition asking to be named hair of Mr. Proehl’s estate. We will see how this comes out but it has cost Mr. Morrison dearly in time and effort to fight for what is, indisputably to those who matter, his.
The good news is that you can prevent this from happening to you! Check your beneficiary designations and get a will now! Work with an attorney who understands the unique challenges facing couples in nontraditional estate planning.