Estate Planning for People With No Heirs

September 23, 2021
What to do with your estate when its inheritor isn't obvious.

One of the most important parts of estate planning is determining how to divide your assets. But what if you don't have a spouse, children, or other obvious heirs?

"Those in this situation might genuinely wonder, What's the point?" says Bob Barth, a Schwab wealth strategist based in Orlando, Florida. "But passing without a will or immediate heirs increases the odds your money will go to someone you'd rather it not."

Inheritance hierarchy

While the process differs by state, the inheritance hierarchy usually goes like this: surviving spouse, followed by children, and then grandchildren. If none of those relatives can be identified, your assets could go to parents, grandparents, siblings, nephews, nieces—or even the state.

"With no will or next of kin, your assets become escheated—which is just a fancy way of saying the state lays claim to them," Bob says. "In pretty much every case, it's better to pick someone yourself."

Alternative heirs

Rather than let the state decide, people without heirs may designate a beneficiary to inherit their assets. It can be a relative, friend, or charitable organization—anyone except the attorney who drafted your will.1

If philanthropy appeals to you, you have several options, including:

  • Charitable remainder trusts: The donor receives an immediate charitable deduction based on the present value of the cash or other property that is transferred to this irrevocable trust. The donor also receives an income stream from the trust for years or for life, and a designated charity receives the remaining assets upon the donor's death.
  • Donor-advised funds: The donor makes an irrevocable, tax-deductible contribution of cash, securities, or appreciated noncash assets; the donor can invest those funds for future potential growth and recommend grants to qualified 501(c)(3) charities at any time.
  • Private foundations: This type of charitable organization is typically founded by a family or an individual with an initial tax-deductible gift and is managed by a board of directors or trustees, who may be paid for their efforts and who control the disposition of all assets; grants are not limited to qualified 501(c)(3) charities.2

The choice between them comes down to personal factors, including how much oversight you want to have and whether other family members will be involved. Be sure to talk to your financial advisor and a tax professional with experience in charitable giving prior to implementing one of these giving strategies. 

Beyond money

In addition to stipulating what to do with your financial assets, those without obvious heirs should designate a person who can make critical decisions in case of incapacitation:

  • A durable power of attorney for finances, for example, authorizes someone to handle your financial and legal affairs.
  • A durable power of attorney for health care authorizes someone to make medical decisions on your behalf.
  • A living will details the medical interventions you would and would not like to receive to keep you alive.

Without such legal documents and ironclad instructions, your next of kin (as determined by the state), even if a distant relation, may decide for you. "Many people have very strong preferences when it comes to these kinds of decisions," Bob says. "Without these documents in place, it's out of your hands."

You'll also want to name an estate administrator (a.k.a. executor or personal representative) to take over upon your death. An administrator will handle probate court proceedings, distribute your assets, manage the sale of your property, and notify your banks and credit card companies of your passing (which can help protect the deceased—and hence the estate—from identity theft). You could choose an accountant, an attorney, a financial planner, or even a professional executor, if available in your state.

"Not all aspects of estate planning have to do with money," Bob says. "A few hours spent today can take a lot of uncertainty out of the future."

1In most states.

2Limitations on the tax deduction may apply based on the donor's adjusted gross income and whether the donor itemizes her or his deductions. For additional information on private foundations, visit

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed.

Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.

A donor's ability to claim itemized deductions is subject to a variety of limitations depending on the donor's specific tax situation. Consult your tax advisor for more information.

Gifts of appreciated property can involve complicated tax analysis and advanced planning. The above article is meant only to be a general overview of some of the considerations and is not intended to provide tax or legal guidance. Please consult with your legal or tax advisor.

This information does not constitute and is not intended to be a substitute for specific individualized tax, legal, or investment planning advice. Where specific advice is necessary or appropriate, Schwab recommends consultation with a qualified tax advisor, CPA, financial planner, or investment manager.