Intestacy

Intestacy is the legal term for the condition of dying without a valid Will. While not a direct investment term, it’s a critical concept in Estate Planning that every serious investor must understand. When a person dies intestate, they forfeit their right to decide who inherits their assets. Instead of following the deceased's wishes, the distribution of their property—including their entire investment portfolio, real estate, and personal belongings—is dictated by the laws of their state or country. This process, known as intestate succession, is managed by a Probate Court, which appoints someone to oversee the estate. For investors who have spent years carefully building a portfolio, intestacy represents a catastrophic failure of planning, potentially leading to unintended consequences, family disputes, and the forced liquidation of assets at unfavorable times. It essentially hands over the final, and arguably most important, phase of your financial plan to legal bureaucracy.

Think of your investment portfolio as a carefully constructed ship designed to sail for generations. Dying intestate is like letting that ship drift into a storm without a captain or a map. The state, not you, decides who gets control. This can have devastating consequences for your hard-earned wealth.

• Forced Sales: A court-appointed Administrator may be required to sell assets—your prized stocks, a rental property, or a family business—to pay debts or simply to divide the value among heirs. This often happens at inopportune market times, destroying value you spent a lifetime creating.
• Unintended Beneficiaries: The law follows a rigid formula. Your life partner to whom you weren't married might get nothing. A distant, financially irresponsible relative could inherit a significant stake, while a beloved stepchild or a favorite charity is left out completely.
• Family Conflict and Delays: Intestacy is a recipe for family drama. Disputes over who should be in charge or who deserves what can drag the process out for years, racking up legal fees that drain the estate's value. Your assets are frozen during this time, unable to be managed or reinvested effectively.

For a value investor focused on long-term wealth preservation, avoiding intestacy is non-negotiable. It is the ultimate unforced error.

When you die intestate, the government doesn't just take your money. Instead, it follows a strict, one-size-fits-all legal script called intestate succession to distribute it.

Every jurisdiction (be it a U.S. state or a European nation) has a legal pecking order for inheritance. While the specifics vary, the general pattern is predictable and impersonal. The court will look for relatives in the following order:

• Spouse and Children: Typically, the surviving spouse and children are first in line. The division between them can be complex. For example, a spouse might get the first portion of the estate with the remainder split with the children.
• Parents: If there is no spouse or children, your parents are usually next.
• Siblings: If your parents are also deceased, your assets will likely go to your brothers and sisters.
• More Distant Relatives: The search continues outward to nieces, nephews, grandparents, and cousins.
• The State (Escheat): In the rare case that absolutely no living relatives can be found, your entire estate goes to the state. This is called escheat.

This rigid structure completely ignores the nuances of your relationships and your intentions.

Without a will naming an Executor—your trusted appointee—the probate court must appoint an Administrator (also called a personal representative) to manage the estate. This individual could be a relative who petitions the court, or if no one is suitable or willing, it could be a professional administrator or even a government official. This person has the power to locate assets, pay final bills and taxes, and distribute what's left according to the intestacy laws, all under court supervision. It's a costly, time-consuming, and public process that undermines the privacy and control every investor seeks.

Your investment strategy doesn't end when you do. A well-crafted will is the most fundamental tool of risk management for your personal legacy. It is not an instrument reserved for the ultra-wealthy; it is essential for anyone who has assets and cares about where they go. Think of it this way: you wouldn't buy a stock without due diligence, and you wouldn't build a portfolio without a strategy. Why would you leave its final distribution to chance? Creating a will is the ultimate act of taking responsibility for your financial life. It ensures your assets are transferred efficiently, to the people you choose, and in the manner you intend. For more complex situations, instruments like Trusts and having a Power of Attorney can provide even greater control and protection. Don't let the government write the final chapter of your financial story.