Why It Is So Important to Make a Will and Avoid an Intestacy
It is never too soon to think about making an estate plan. Even if you are relatively young and healthy now, a sudden accident may leave you incapacitated and unable to make critical legal decisions regarding who receives your assets upon your death. If you are one of those individuals who feel that a Will is unnecessary, this article reviews a few things that may be news to you!
Many individuals think that setting up an estate plan is unnecessary. After all, doesn’t Pennsylvania law decide what will happen to your property if you die without a Will? Yes, there are such provisions–known as intestacy laws–on the books. But these laws are full of surprises and do not always prevent disputes from arising between family members. Even if the distribution pattern under intestacy laws fits your family pattern, there are many critical opportunities that can be missed when an individual dies without a Will. That is why you should make every effort to avoid such a situation when possible.
Married with Children
Many of us assume that in a marriage, the surviving spouse receives all the assets upon a spouse’s death. That may be the case if every asset is held as tenants by the entireties (which is joint with rights of survivorship between spouses). But, if assets are not held in that fashion, would you be surprised to know that the surviving spouse receives only the first $30,000 outright? After that threshold, the remaining assets are split between surviving children. If there are children from another marriage, then there is not even the first $30,000 allowance to a surviving spouse.
Single Person – Should be Simple!
Even single individuals can be setting up family members or friends for unpleasant surprises under an intestacy. Or, worse yet, they may be setting up assets to be subject to Pennsylvania’s Inheritance Tax at a second death (for example, when a 70-year-old individual dies and leaves no children or a spouse but is survived by a 93-year-old parent). The laws of intestacy require the assets to pass to the parent (and not siblings or nieces and nephews as perhaps intended).
But what if that parent is in a nursing home on Medicaid? That parent now has assets that will become “Excess Resources” that jeopardize their Medicaid eligibility – this same 93-year-old parent who may die within 6 months, leaving assets to other family members, which will also result in a second round of Inheritance Tax. It’s not so simple!
Not All Families Get Along
Disagreements among family members are NOT just for the rich and famous. Disputes as to who gets what, even when it relates to the meat in the freezer, are unnecessary and can be anticipated and managed within a properly drafted Will or Living Trust. So, it is interesting to see that an estate with a value of $90,000 made headlines with a case that was litigated to the PA Supreme Court!
An adult who is not married and has no children, but who does have two parents who do NOT get along, passes away with an asset worth $90,000. This asset was a judgment he received by virtue of a litigation matter from being shot at age 18, leaving him paralyzed. Unfortunately, the adult child did not execute a Will between the ages of 18 and the age of 37 when he died. Upon his death, the legal entanglement as to whether his mother, who also served as administrator of his intestate estate, worked its way through the courts. Her position was that his father had abandoned this adult child and therefore had forfeited his 50% share. Ultimately, the legal analysis and facts were resolved in the father’s favor and he ultimately received a 50% share.
The recent case from the Pennsylvania Supreme Court, Estate of Small v. Small, illustrates several important points. Notwithstanding the fact that son had been significantly injured, he had not been adjudicated as being incapacitated and therefore could have executed a Will (and other important estate planning documents such as powers of attorney). Secondly, if this son’s mother had been the faithful caregiver for all those years, he missed an opportunity to make a plan for her to benefit from his remaining asset. Instead, the litigation matter worked its way through the courts and the ultimate beneficiary of his estate turned on a technical analysis of whether the adult son was a “dependent” child for purposes of a forfeiture rule.
Ultimately, the Pennsylvania Supreme Court rejected the mother’s attempt to exclude the father from his son’s estate and both parents received 50%. Whether this result was what the adult son would have wanted had nothing to do with the legal analysis.
There are many similar stories of other individuals who have died without planning: a parent leaving behind a special needs child without a plan, or husband who dies leaving an unblended family. A critical lesson from these examples is that these intestacy laws do not care about the type of relationship a deceased individual had with a potential heir. These laws are helpful in ensuring a result, but certainly not a plan.
Contact Anderson Elder Law Today If You Want to Make a Pennsylvania Estate Plan
Don’t pass up your opportunity to craft your own estate plan. If you need advice or assistance from a Pennsylvania Certified Elder Law Attorney, contact Anderson Elder Law today to schedule an initial consultation. You can also email us at info@andersonelderlaw.com or call 610-566-4700 to schedule.