By Bernard A. Krooks, Certified Elder Law Attorney
Despite the fact that we have been writing about the importance of estate and elder law planning for decades, the reality is that about half of us never get around to completing even basic estate planning. What I mean by that is that most people don’t sign a power of attorney or health care proxy and they die without having signed a will. Dying without a will means that you died “intestate.”
But what does that really mean for the family? First, when someone dies, the family is often confused and overwhelmed when it comes to legal issues and what needs to be done. This is true even when the person who passed away has spent considerable time getting their affairs in order. When someone dies intestate, the states have different rules on how things are handled. So, if your deceased relative lived in another state, the rules may be different, although there may be some similarities.
One common myth is that if you die without a will, the government or the state takes all your property. This is not true. However, if you die intestate and without relatives who are legally entitled to inherit your property in the absence of a will, then your property may escheat to the state. Escheat is the power of a state to acquire property for which there is no owner. Of course, this result can be avoided by having a valid will. A properly drafted will provides for contingent beneficiaries in the event the primary beneficiaries predecease the decedent.
Another misconception is how joint bank accounts and other similar types of property are handled. Joint bank accounts generally pass to the other person who is named on the account regardless of whether there is a will or you died intestate. The same rule applies to other assets that have designated beneficiaries such as retirement accounts or life insurance policies.
Another thing you may have heard is that it is more expensive to die without a will. Generally speaking, this is not true. The filing fees and costs to administer the estate probably won’t depend upon whether there was a will. However, without a will several opportunities to save taxes, preserve government benefits, or protect assets from creditors or others may be lost. For example, without taking the time to do proper estate planning you cannot set up a trust. Depending on the type of trust that is created, taxes can be minimized, government benefits such as Supplemental Security Income and Medicaid can be preserved, and assets can be protected from litigious predators such as creditors and divorcing spouses.
Also and perhaps most importantly, the people who inherit your property if you die intestate may not be who you think they should be or who you want to receive your assets. New York State has laws indicating who receives your property when you die without a will and survivors are often surprised to learn that the distribution of assets that New York State has in mind for their deceased relative is not what they thought it would be. Thus, by dying intestate the decedent gave up the opportunity to decide how his or her property would be distributed. In addition, you give up the ability to nominate your executor. The executor is the person charged with the responsibility for administering your estate and making sure that all your debts are paid and that your assets are marshalled and distributed to the people and/or charities that you wanted. Without a nominated executor, someone has to petition the court to be the administrator of your estate.
A will is a powerful document and many people use it as a way to confer values on the next generation. This will be your final message to the world; don’t let the opportunity slip away.
Bernard A. Krooks, Esq., is a founding partner of Littman Krooks LLP and has been honored as one of the “Best Lawyers” in America for each of the last seven years. 914-684-2100, www.elderlawnewyork.com.