Dying without a will can lead to many problems and can cause a great deal of delay, expense and distress to your loved ones who are left to deal with your estate. There are many problems associated with dying without a will.
A will gives you control. It is a common misconception that even if there is no will everything will go to your spouse. This is not the case depending on the value of the assets in the estate a spouse may only be entitled to a proportion of the estate if there is no will.
If you are living together with your partner, but are not married, your partner does not have an automatic right to your assets. If you die without a will your estate is distributed under the laws of intestacy. This can result in complications and the laws of intestacy do not adequately account for modern family situations.
Not having a will can result in huge problems for unmarried partners, particularly where children are involved.
Even if you are married the whole estate does not necessarily go to the surviving husband or wife. If there are no children the estate will go to the surviving spouse up to certain specified limits and the remainder will go to other family members depending on who survives the deceased. For example, if the deceased had siblings and parents then they would share in the remainder of the estate.
If you have children and have no will or nominated guardians for your children then the court will decide who will look after them if you pass away. A simple clause that can be included in your will can ensure your children are looked after by the guardians you choose.
It is a good idea to set up a trust for your children’s inheritance as it allows you some control over your money once you pass away. It is possible for you to lay down certain
terms to help protect assets from youthful irresponsibility. This is particularly useful when making long term financial provisions for disabled children.
The laws of intestacy do not make provision for children from a partner’s previous marriage or step families. If you die without a will step parents and step children will not benefit, regardless of whether or not you live together or how long you have been living with them.
Not having a will in place can open up the possibility of long and protracted legal battles between friends, partners and relative. Put simply without a will your wishes are ignored.
Despite all of the benefits listed above, many people never get around to making their will.
The most famous recent example is singer Prince, who appears to have died without a will in place. As a result, it is uncertain who will end up controlling his Paisley Park estate, his music catalog and his ongoing legacy.
Prince was worth $300 million according to various estimates and his estate is expected to grow as sales of his music have exploded since his death.
However, the consequences of Prince failing to properly plan his affairs are potentially catastrophic.
The court will first have to appoint an administrator to temporarily oversee his estate. Since Prince was not married, had no known children, and his parents were deceased, his $300 million fortune will need to be distributed according to Minnesota’s intestacy laws which in this case would be split his estate among his siblings and half-siblings. Of course, the actual value of the estate is likely to be fiercely contested in court for years.
In any event, regardless of its ultimate valuation, in the absence of a well-drafted estate plan, Prince’s estate will almost certainly be decimated by estate taxes and attorneys fees. The federal government assesses a 40% estate tax on amounts valued at over
$5.45 million. The State of Minnesota would then further tax Prince’s estate at additional 16%, thereby wiping away well over 50% of the value of the estate. Throw in a potentially long and contentious public battle between squabbling heirs, individuals claiming to be legal heirs, angry creditors, and the IRS, and millions more can easily be consumed in attorney fees.
If there is one thing to learn here, it’s that everyone should have a will, and it’s never too early to make one.
Jefferson Trust team would be happy to help you to ensure a smooth inheritance by making a will or creating a trust. Should you need any further information, please do not hesitate to contact us info@jeffersontrust.hk.
Endnotes
1. The New York Times: “Prince Died Without a Will, According to Court Documents Filed by His Sister”, 2016, < http://www.nytimes. com/2016/04/27/arts/music/prince-died-without-a-will-according-to-court-documents. html>;
2. CNN Money: “Prince had no will, says his sister”, 2016, <http://money.cnn.com/2016/04/26/news/compa nies/prince-no-will/>;
3. FL&B: “Prince’s Estate and the consequences of dying without a will”, 2016, <http://www.flblaw.com/princes-estate-consequences-dying-without-will/>.
