What’s A Will? Why Do You Need One?
By Justin M. Jacobson, Esq.
“Daddy, what’s a will?” As Jay Z’s first-born child, Blue Ivy Carter, so eloquently inquired on her father’s track, “Legacy,” off his latest release, “4:44.” The simple answer is that a will is a writing that lists how an individual’s estate will be handled after their death. This sets forth how possessions will be distributed. While this seems straight-forward, advanced estate planning is extremely important to generational wealth preservation. In addition, intelligent estate planning enables an individual to ensure that their wishes for their estate administration are observed. This is especially applicable due to the variety of complex issues prevalent in today’s world as they relate to non-marital children and other non-traditional family dynamics. The potential risks that the lack of an executed will may expose an individual and their heirs to are also an important consideration.
As mentioned above, a will is a document that reveals the testator’s (the creator of a will) wishes on the disposition of their property upon their death. This document lists who is entitled to what property, such as any bank accounts, real estate and other personal property that the testator owns. A will may also include information regarding the guardianship for any minor children as well as list how funds earmarked for the minor would be handled if the will is effective before the minor is of age. A will also details how any non-marital children and other family members are handled. In addition to a will, there are other associated estate planning documents such as a living will, a health care proxy and a power of attorney.
According to a 2015 “Rocket Lawyer” estate-planning survey by the Harris Poll, 64% of Americans do not have a will. This is an alarming statistic as the lack of a valid will/can become problematic for a variety of reasons. For example, there are many instances of the possessions belonging to an individual who died intestate (without a will) being passed through statutorily established procedures to estranged family members because they fall within the applicable line of succession. This could cause issues between the remaining relatives, eventually leading to costly legal battles and fighting amongst them.
The lack of a will can also potentially lead to sibling in-fighting about who is entitled to what items as well as what amounts of their deceased parent’s estate they are authorized for. There are even instances where the children of a first marriage may not be entitled to any portion of a particular estate; and, instead, an individual’s new partner receives the entire deceased person’s estate. Furthermore, a “life partner” or other individual that only co-habitat with the decedent may be left without legal standing or even the ability to contest the will to obtain a share. Finally, the existence of a will ensures that everybody who the testator wants to be compensated is. The document avoids confusion as to who gets what and is instrumental in ensuring the proper administration of a person’s estate after their death.
While the reasons to have a validly executed will and proper estate planning seem straight forward, many high net worth individuals and celebrities, fail to adhere to this advice. For example, rock star “Prince” is a recent example of a celebrity that died without proper estate planning in regards to the state and federal taxes owed on his estate. The failure to properly protect and provide procedures for the appropriate and economical disbursement of Prince’s estate could potentially risk a loss of half of this $200 million estate to the government. Similarly, actor Philip Seymour Hoffman failed to properly administer his estate. This oversight caused his estate to owe approximately $12 million in estate taxes upon his death, which could have potentially been avoided, or even possibly reduced, with proper estate planning. There are also many other instances of celebrities failing to administer their estates properly, including Amy Winehouse, Tupac, Bob Marley and Barry White. These missteps by these high net-worth individuals have caused issues between their remaining relatives, including exposing them to long and costly legal battles between family members.
If an individual dies without a validly executed will, they are deemed to have died intestate. This means that the applicable state intestate procedures will be followed. Each state has their own unique statutory procedures that determine how the estate of a person who died intestate is distributed (New York). Additionally, if after following the lines of succession provided by a state statute, no heir is found, the decedent’s property may escheat to the government. This means that the entire estate will pass to the state without being disbursed to any individuals. This is clearly an action that an individual would probably like to avoid. For instance, even if the individual has no living heirs, their estate could potentially be presented to a charity or other third-party organization instead of escheating to the government.
While there is no legal requirement that an individual must have a will, the potential issues that may arise due to one not existing may outweigh the costs associated with preparing one. If an individual wishes to properly provide for their heirs and other important individuals in their life, a valid will should be prepared and executed. The lack of a will can cause a person’s estate to be transferred to an individual that they may not want it to, or in some cases, to the government.
This article is not intended as legal or business advice, as an attorney or other professional specializing in the field should be consulted.
© 2017 The Jacobson Firm, P.C