The Default Rules: What Happens If You Fail to Plan Ahead?
Planning ahead is one of the most important steps you can take to protect your wealth, health, and family. Without a clear plan, the state’s default rules of intestate succession will step in, and they may not align with your personal wishes.
These default rules govern everything from your medical decisions to how your estate is handled after your death. Unfortunately, they often result in undesirable outcomes which are difficult to predict.
What’s so bad about these rules?
How the Rules of Intestate Succession Can Go against What You Want
Without proper planning, the default rules set by Florida statutes will take over, and these rules may not align with your preferences.
Let’s look at how these default rules can affect your asset distribution, finances, and medical decisions.
Read Transcript
Hi, this is Barry Haimo. Thanks for stopping by for another dose of Bite-Sized Bits of Knowledge, where we give you meaningful information in a short amount of time. We’ve covered a lot in our videos so far, but let’s just go back to what I talked about in my initial video – introduction video – where we talked about what happens if you don’t plan ahead. The default rules kick in.
The default rules. There’s a lot of statute. If you really want to put yourself to bed one night, look at that statute, read it before you go to bed. It’ll put you right to sleep. These rules kick in. They apply – kind of breaking up into two parts – lifetime. They apply to your finances, paying bills, taking on debt. They apply your medical decisionmaking, your caregiving. They’re going to limit who you can see.
And the reason why they’re doing this and they’re having this impact is because the default rules will end up – Well, A) going through court to be appointed – someone has to be appointed in these capacities. And then once that happens, that person is going to be in charge of making decisions for you.
That person may or may not be someone that you want. It may or may not be someone that you like, and it may or may not be the person in another universe you would probably ever want to have in that position. The only opportunity you have to make sure it goes the way you want is to plan ahead. Otherwise, you’re rolling the dice. So finances, medical care, well-being on the post-death side.
Well, let me go back real quick. What I’m talking about here is, like, incapacity. If you’re not able to do things yourself for whatever reason, whether it’s dementia, Alzheimer’s, physical disability, whatever, you’re going to need help. And these will kick in.
Now if you pass away, whenever that is, hopefully it’s a long time in the future, again, your personal representative is going to be chosen for you if you don’t choose. Hopefully, it’s somebody that you would feel comfortable doing that job, getting into your personal affairs, really understanding your life. And more so, driving that probate through the system, diligently and responsibly.
Your beneficiaries are going to be chosen by statute. Whether you like it or not, it’s going to go in a certain way. One of the biggest drivers for us, I think, when people want to do their Estate planning is that there’s a problem with the family. There’s a complicated family dynamic that is driving them to make a change. They don’t want the default rules. There’s a lot of reasons for that. I’ve mentioned a few before.
So your personal representative, your beneficiaries. I will also say that by default, your beneficiaries will receive their inheritance (if there’s any equity in the estate, after creditors are paid) outright.
Which in English means they’re going to get the money or the title of the property in their name, and they’re going to have total control over what to do with it. That may be a disaster or may not. They may have creditors or spouses or people that are going to try and get that money or they may not. They may be brilliant executives and they might take the money and triple it or quadruple it or they may not. That’s the risk you’re taking.
All of this – going through the court, mystery people being appointed, mystery beneficiaries, and of course, the big question mark on how that money ends up within ten years – will all be determined by statute, and it’s very unpredictable as a result. It’s unpredictable as a result.
So those are the main points that I would say are kicking in for the default rules, and I hope that you found this helpful. We’ll talk more about those lifetime roles in a subsequent video soon. So thank you for tuning in and stopping by and stay tuned for more.
When it comes to protecting your wealth, health, and family, planning ahead is essential. Without proper estate planning, the default rules set by statute take over, and they might not reflect your personal wishes.
Whether it’s making medical decisions, handling your finances, or distributing your estate after death, these rules are designed to apply a one-size-fits-all approach, but they’re rarely the best fit for you. How can you make informed choices about who manages your affairs when you’re no longer able to?
Where the Default Rules Apply
The default rules are complex and apply to two major areas:
Lifetime Management. If you become unable to continue managing your wealth due to unforeseen circumstances such as dementia or physical disability, the default rules will kick in. Florida’s default rules determine who will manage your finances, make medical decisions, and take care of your well-being. These decisions go through court, and a judge appoints someone to handle these tasks for you. However, as we covered above, the person appointed may not be someone you trust or want in charge of your affairs.
After Death. When you pass away, Florida rules dictate how your assets are distributed. The court appoints a personal representative, and your beneficiaries are chosen by statute. This can lead to unintended consequences, such as a person you barely know handling your important information, which could result in financial mismanagement or conflict.
What Benefits Do I Get from Creating a Comprehensive Estate Plan?
There are a number of valuable reasons why you should make an estate plan:
- Ensure Control Over Decision-Making. You want someone you trust to make important decisions if you can’t. An estate plan enables you to choose this person yourself and even communicate your wishes to them.
- Minimize Court Involvement. Without planning, your estate will likely go through probate, a lengthy and costly process. Planning ahead can help avoid this.
- Decide Who Will Inherit Your Assets. The default rules often distribute assets to family members in a way that may not align with your intentions. Planning ahead allows you to specify who gets what and when.
- Navigate Family Dynamics. If your family situation is complicated or you have estranged relatives, planning ensures that your assets go to those you choose, rather than being chosen by statute.
How Comfortable Are You With the Default Outcome?
When considering whether to plan ahead, ask yourself a few important questions:
- Who do you feel comfortable having access to your finances, medical decisions, or personal affairs? The default rules may appoint someone you would not choose, and it’s crucial to ensure that the right person is in place.
- How confident are you that the default person will manage your affairs responsibly?
- How comfortable are you that the default person chosen will understand your wishes? The person you select should be able to represent your wishes accurately, whether it’s for medical care, finances, or the distribution of your assets.
Don’t Leave It to Chance
If you haven’t taken the proper precautions to protect your estate, you will be at the mercy of Florida statute. This is why it’s so valuable to have a trusted attorney guide you through the process. Together, we can help you avoid preventable mistakes to ensure you have priority over the default rules.
Get in touch today to get started!
Originally published 06/17/2021. Updated 12/16/2024.
Author:
Barry E. Haimo, Esq.
Haimo Law
Strategic Planning With Purpose®
Email: barry@haimolaw.com
YouTube: http://www.youtube.com/user/haimolawtv
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