Tuesday, February 26, 2013
Many people die intestate (without wills), leaving property to be allocated by law among potential heirs. Probate reforms that more closely align intestacy allocations with preferences are designed to make property pass at death in a manner that better approximates what decedents intended. This goal is frustrated by the voluntary nature of intestacy. If individuals are rational, probate reforms that better match intestacy allocations to decedent intent encourage greater numbers of individuals to do without wills. This economizes on costs, and improves efficiency, but generally reduces the extent to which property dispositions correspond to intentions. With rare exceptions, it is impossible for the following three conditions simultaneously to hold: that individuals act rationally, an intestacy regime is efficient, and an intestacy regime supports the closest possible match between property dispositions and decedent intent. Indeed, there exists an important range of conditions under which the most efficient intestacy regime supports the worst possible match between property dispositions and decedent intentions. Consequently, if individuals behave rationally then it will generally be necessary to choose between reforms that promote efficiency and those that make property pass in a manner that corresponds to decedent intent. The goal of supporting efficient outcomes by adhering to decedent intent requires that individuals have rational preferences that they express in wills, but also requires that they make irrational or uninformed decisions about whether or not to have wills.