What happens if someone involved in an Estate is dead?  These situations are very common.  A few standard approaches apply….let’s look at a few situations:

The most important distinction to know is that PRE-deceased situations are very different than POST-deceased situations.  When I refer to “PRE” and “POST” I am talking about when the person died in relation to the decedent (the one whose Estate we are talking about)

The basic rule is that POST-deceased persons do not lose their rights.  Generally, the interest a post-deceased person had in an Estate now belongs to THEIR Estate.

A quick example – A widow with three adult children dies with no Will.  Her heirs would be her three adult children.  Some time passes and no action is taken in this woman’s Estate and then one of her adult children (let’s make him a son) dies. What are the shares in the widow’s estate?  It would be one-third each to the two living children and one third to the heirs of the post deceased son.  Those heirs would be determined either by the son’s Will, or if he had no will, by HIS heirs under intestacy.  Let’s give the post-deceased son a spouse and 4 minor kids, and no will.  So now, his one-third interest will be divided within his Estate under intestacy ($50K + half to the spouse and the other half among the minor children).

Wait, it gets worse…..if we want to move forward with the widow’s Estate, we can’t even get started until we get jurisdiction over the post-deceased son’s estate.  That is, we have to establish the post-deceased son’s estate before we can even move forward with the main estate.  It is not unusual to process a post-deceased estate BEFORE you can even do the main Estate.

Pre-deceased situations are different.  Let’s take the above example and make the adult son pre-deceased.  In that case, the widow’s Estate would go one-third to each of the the two surviving children and one-third split among the 4 grandchildren.  The daughter-in-law would be OUT.  (Note – in a post-deceased situation she would be IN for a meaningful share).

I have been involved in Estate with multiple “estates within estates”.  These complexities must be addressed or nothing can move forward.

There are a few important lessons in all this:

  • Estates should be addressed promptly.  For various reasons things can get delayed.  I have seen situations where nobody did anything in an Estate for 20 or 30 YEARS!  This usually happens when the only asset is a house, and nobody does anything because some family member is living in the house and then they die (or move, or need money).  But even in non-extreme situations, a delay of a few years due to procrastination creates complications related to post-deceased parties.
  • People should make Wills.  When people don’t make Wills, results are often a crapshoot.  In the predeceased child situation above, if the widow had a Will her wishes would be clear.  Maybe she would have left something to the daughter-in-law…it happens more than you might think.  Maybe she would have put her grandchildren’s funds in a trust and named an appropriate Trustee.
  • People should make Wills, Part 2.  If the post-deceased son above had a Will, it would have been clear what HE would have preferred, and I suspect it would have been 100% to his spouse…for her benefit and so she could take care of their children.  Having the inheritance going partially to the grandchildren is a horrible result, especially if they are minors.  The money would be tied up in Guardianships, with a ton of money wasted, to say nothing of the inconvenience and heartache.  Easily preventable, but a person has to be pro-active and make the Will.
  • When people make Wills, among the most important considerations are the “what-if” scenarios.  Well drawn wills reflect the persons intentions in case someone pre-deceases.  Wills that don’t do this leave too much to chance.

While “estate within estate” situations are more work than estates without this issue, it is a huge mistake to procrastinate.  These situations only get harder, and yes, there are cases with MULTIPLE estate within estates.  My own personal record is six!

If you are confronted with one of these situations, or if you want to prevent such a situation, please contact me.

Who REALLY ought to make a Will?

If you are considering whether you need to or not, the answer to this question starts with a question…..

“Who would inherit from you if you did not make a Will?”

When I interview someone who is considering making a Will, the first issue I explore is THAT.  There is a good reason I start with “who would inherit if you do not make a Will?”   It lets me know who the “players” are. Not only that, later on, the people on my little family tree are the people who must be notified when I try to probate the will.

People are sometimes surprised when I start off questioning them about their closest family members, especially when what they want me to know is “I don’t want those people in my Will”.  This is fine with me, but I still have to know who they are. This is because anyone who would inherit if there were no will is considered an “interested party” when the Will is being probated. Legally, we call these people “distributees” or people who are “adversely affected” by the Will. They are the only people who will have standing to contest a Will.  If it’s a close relation being excluded, say a child or a sibling, I always ask WHY they are being left out, and I make a written note of it in my file.

When somebody is left out and squawks after the person dies, having a note about it in the drafting attorneys file is VERY important. When I represent someone in a potential will contest, one thing I hate to see is a note in the drafting attorneys file explaining WHY the person is being left out.

I am amazed at how often people do not consider the question “Who would inherit from me if I did not make a Will?”  I frequently see this is Estates where there is no Will, and distant relatives are inheriting. Whenever I see this, often with meaningful money involved, I always think “Could they have intended THIS?”  Did they not have anyone, a friend, or a charity, that was more deserving than the distant relatives who are now inheriting?  I’ve seen cousins inherit who never even met the decedent!

Think this never happens?

I GET THESE CASES ALL THE TIME!!!

Truth be told, I frequently represent distant relatives in the inheriting position, when the inheritance is a major score for them. I like these cases, but at some point it always occurs to me (and it sometimes occurs to people who actually knew the decedent) “they should have made a Will”.

Very often in those cases people tell me “the decedent talked about making a Will”, or “he told me he was going to make a Will”, but for some reason they never did. I think there are several reasons for this….

Procrastination – a vague intent to do it in the future, and just not getting with it.
Superstition – a fear that doing it will cause illness or death.
Cheapness – not wanting to pay for a Will.
Delusions of immortality – more people have this than one might think.
Monumental inconsiderateness – totally not caring what happens to others after you go.

Strangely, Wills are most often made by people in a tight nuclear family….say a married couple with children. There are good reasons for such people to make Wills too, but the fact is, the inheritance aspect is not so different making a Will than if they didn’t.  (To be clear, those folks should make Wills for other reasons)

People who don’t ask the question “Who would inherit from me if I did not make a Will?” are often some combo of cheap, procrastinating, superstitious, monumentally inconsiderate, and/or delusional (vis a vis their mortality) individuals. Business-wise, I don’t mind this all that much, these end up being my largest fee cases, but…..it sure is puzzling.

Maybe they “just can’t deal with it”, and on many levels I understand and respect this. I also know that if you are the person someone SHOULD be putting in their Will, it is a difficult subject to bring up. I’ve had people ask me what to do in this situation. Not only is there is no easy answer, but every situation is unique.

I will say this…..if the person has talked about it, and you think they WANT to do it, HELP THEM get it done. But, as we say in poker, don’t overplay your hand.

Yeah, this gets complicated. But not nearly as complicated as when procrastination wins out, and the person who should make a Will doesn’t.

 

What happens when a person dies without a Will? Contrary to popular misconception, their assets do NOT “go to the State”. When there is no will, and a person dies, the laws of intestacy apply. All States have such laws, essentially a logical order with the closest relatives inheriting. In New York, it goes like this:

– if a spouse and no children, all to the spouse

– if children and no spouse, all to the children, per stirpes *

– if spouse and children, first $50,000 to the spouse, then 50% to the spouse and remaining 50% to the children, per stirpes *

– if no spouse or children, all to the parent(s)

– if no parents, all to siblings (or children of predeceased siblings, a/k/a nieces/nephews), by representation **

– if no siblings or nieces/nephews, you start getting to aunts/uncles and cousins. (lots of special rules)

– if no aunts/uncles/cousins, you go to first cousins once removed, ie – children of pre-deceased first cousins (even more special rules)

* I try to avoid using legal lingo, but “per stirpes” come up a lot, and is mentioned in lots of wills.  It means “per the lineage”, and can be illustrated with a simple example.  If an unmarried person dies, and had two adult children, but one of the children had pre-deceased but had three children (grandchildren to the person who died), the estate would go 50% to living child, and 50% split 3 ways among the children of the pre-deceased child.

** Sibling/niece/nephew cases are not done per stirpes, but “by representation”.  The best way to calculate this is to say its sort of like per-stirpes BUT nobody has an advantage or disadvantage by being in a larger or smaller family.  A simple example to illustrate this:  The decedent was not married, had no children, and parents pre-deceased.  He had three siblings, one is living and the other two pre-deceased.  Of the two who pre-deceased, one had two children and the other had four children.   Under inheritance by representation, the surviving sibling would inherit 1/3, and the remaining 2/3 would be divided equally among the six nieces/nephews.

The above is a rough sketch.  There are rules to cover EVERY situation you could think of, and they ALL come up.  When the question is “which relatives are entitled to what percentage”, there is always an answer to that question.  Of course, sometimes it is not so clear who is legally related. As you might imagine, we sometimes have to determine who was married (or divorced), or who was somebody’s parent, or was somebody legally adopted, or whatever became of somebody who has gone missing.

Rarely a dull moment!