Yes, You Really Do Need A Will
Metin and Nur were a happily married couple who never got around to signing a Will. They considered talking about disability or death to be uncomfortable. They thought that if "something" happened, their assets would be distributed according to the law. Nur assumed that upon her husband’s death, she would receive all of his assets. Metin died unexpectedly, and it was only then that Nur learned the valuable lesson that so many people wait until it’s too late to realize: Metin should have signed a Will.
One of the most common estate planning questions that attorneys hear is whether someone really needs a Will, Trust, Power of Attorney or Medical Directive. All too often, signing or even thinking about these estate planning documents is put off, and unfortunately, never done. One reason people neglect to sign an estate plan is the misconception that US law naturally directs property “correctly.” The concept that the law will provide for a proper distribution is especially engrained in those experienced with civil law countries that have a tradition of forced heirship, such as Turkey. The truth is that in the US, a Will provides the opportunity to determine the beneficiaries of one's estate, with few restrictions, while state law - which determines how assets are distributed when there is no Will – often directs the distribution of an estate quite differently from how a person would actually want his or her estate disbursed. To complicate matters further, the laws of each state vary significantly, as is reflected below, with the example of the differences among Maryland, Virginia and the District of Columbia.
For example, if Metin and Nur had no children, but Metin had a parent still living, his assets (other than joint assets or assets such as life insurance proceeds and retirement funds that transfer according to a beneficiary designation) would be distributed as follows: i) in Maryland, Nur receives the first $15,000 and half of the remaining estate, and Metin’s parent receives the remaining half of the estate; ii) in Virginia, Nur receives the entire estate; iii) in the District, Nur receives three-fourths of the estate, and Metin’s parent receives one-fourth. These results are likely surprising to Maryland and D.C. residents who anticipate their spouse receiving the entire estate.
Now, consider what would happen if Metin and Nur had a child, who at the time of the father’s death is under the age of 18. Metin’s estate would be distributed as follows: i) in Maryland, Nur receives half of the estate and the child receives the remaining half; ii) in Virginia, Nur receives the entire estate; iii) in the District, Nur receives two-thirds of the estate and the child one-third. Additionally, the assets passing to a minor child requires the court to appoint a custodian (who may be an individual unrelated to the family) to oversee the assets, which is an expensive process. The custodian will distribute the assets directly to the child at 18, an age that most parents consider too young to control significant assets.
As Metin and Nur’s situation illustrates, state law often forces a distribution of assets that is contrary to the desires of the deceased. There are many other very good reasons to sign a Will. It selects a personal representative to manage the estate and designates a guardian to raise a minor child and to control the property until that child becomes an adult. For individuals with assets over $1 million, estate planning is a must in order to insure that unnecessary state and federal estate taxes are not paid. For non-citizens or those with assets abroad, the need to explore estate planning is essential for tax planning and later simplification of administering an estate with foreign assets.
Most importantly, estate planning allows for a person to thoughtfully consider how they want their estate distributed, rather than simply hoping for the best. Through the estate planning process, people often uncover their charitable goals and have an opportunity to plan charitable giving for maximum impact.
A lot can go wrong without a thoughtfully implemented estate plan, but ultimately estate planning is motivated out of love – for family, friends and charity. With the freedom each of us has to select the beneficiaries of our life's work, comes the responsibility to plan for that disposition. Please encourage yourself or those you know to complete a thoughtful estate plan….yes, you really must.
Marianne Kayan is an attorney in the Washington, DC law office of Buchanan Ingersoll & Rooney PC where she concentrates on tax law and estate planning/administration. She welcomes questions or comments at marianne.kayan@bipc.com and (202) 452-7929.
This article does not constitute legal advice or a legal opinion on any specific facts or circumstances. The contents are intended as general information only. You are urged to consult your own lawyer concerning your situation and specific legal questions you may have.
