The first three parts of this series have been about the various advanced directives, i.e. Power of Attorney, Health Care Proxy, and Living Will. These are all very important documents but they also become null and void upon your death.
That’s where your Last Will and Testament (the “Will”) comes in. If you don’t write and execute a Will, New York has a default Will set up for you. For those technical people, it’s mainly in the Estate Powers and Trusts Laws (“EPTL”) 4-1.1. If you don’t like what the law says, you need to change it by properly drafting and executing a Will.
When you die with a Will, the person you named in the Will as your Executor needs to bring the Will to Surrogate’s Court to prove that it is in fact your valid Will and then gets designated by the Court as the appointed Executor. This is called a probate proceeding. He or she can then carry out your instructions in your Will with the Court’s backing and approval. If there is no Will, then your spouse or any of your children can petition the Court through an administration proceeding to handle the gathering and distribution of your estate. You have no say in who can or should petition the court. The EPTL has a list of acceptable candidates including creditors and other interested parties. So an Executor versus an Administrator is problem number one.
Problem number two is who actually gets your assets. In a Will, you get to decide. Typically most of my clients say first to their spouse and then to their kids. If any of their kids predeceases them, then that child’s share goes to that child’s kids. You can ensure that your kids or grandkids don’t get the assets too early by putting their share (or potential share) into a trust until a later age. I tend to pick at least 25 years old. My kids are in that age bracket and are just starting to show signs of fiscal maturity.
The EPTL has a different view of all this. The statute says that if you have just a spouse, it all goes to him or her. If you have children but no spouse, everything goes to them in equal shares, and they get it outright when they turn 18. But, if you have a spouse and kids, then your spouse only gets the first $50,000 plus one-half of your estate. The kids get the other half. New York does not want to disinherit the children as a default provision. You need to write a Will to do that!
Further, if the child is under 18, anyone can apply for legal guardianship of that child for that child’s property. The surviving spouse is the legal guardian of that child’s person (i.e. health and welfare) but not of his or her property. It takes another court proceeding to determine who will take on that role. By putting in a Will that the property goes into a continuing trust until the child is 25, and you appoint a trustee of that trust, the problem is solved. So we’ll call the how and when your children get your assets problem number three.
Problem number three gets even more problematic if one of your children has special needs and may need government assistance, or has creditor problems, or just has no idea how to hold on to his money. The statutes do not take these things into account. If your child is over 18 and has not had the need to have a guardian already appointed to her, she gets the asset outright and can do whatever she wants with it. That means to pay off debts, pay back the government, or to just spend it all away.
The last problem (at least for this article) is what happens if you don’t want to give to your children equally. Or, what if you don’t have children, but have nieces and nephews, some of whom you know and like, and some you don’t? Well here’s another surprise. The statute doesn’t care if you don’t like all of your children. There’s no way to know because you didn’t tell anyone (in your Will!), so everybody gets an equal share.
And if you don’t have a spouse or children, the law says you now look up a generation. That means your parents now inherit your estate. If they’re not alive, then it will go down to your brothers and sisters, and then your nieces and nephews. But all your siblings would get an equal share. If any of them have predeceased you, then their children would get their parent’s share. Again, probably not what you had in mind.
The bottom line is that if you don’t write a Will and put your wishes down on paper, New York State has a default Will ready and waiting for you. But if you don’t like what it says, you need to change it.