Bernadette Starzee, The Daily Record Newswire
The music world was shocked by the sudden passing of Prince last month. Another shock came when it was revealed the Artist died without a known will, leading the court to appoint a special administrator to decide the fate of his $100 million-plus estate.
While few estates are as sizable and complex as Prince’s, it’s not so unusual for someone to die without a will.
“It happens more often than you would think,” said attorney Ronald Lanza, a partner at Futterman & Lanza in Smithtown.
In fact, about 55 percent of American adults do not have a will, according to LexisNexis.
No one to run the show
Perhaps the biggest problem when there is no will is that the decedent has not nominated someone to serve as executor.
“The decedent doesn’t get the chance to control or direct how the estate is administered,” said Sarah Rebosa, a trusts and estates partner at Cullen and Dykman in Garden City. “It opens the door for conflict among family members, who may not agree on how the estate should be administered.”
Multiple family members may petition the court to be named administrator. When there is a dispute, or if no family member is available or up to the task, the court will appoint an independent trustee, as in the case of Prince, to oversee the administration of the estate, which includes the valuation and distribution of assets in accordance with the laws of intestacy.
“The state basically drafts a will for the person,” Lanza said.
Many estate cases are “like a divorce, except the parties are dead,” said Derrick Rubin, an attorney with Wisselman, Harounian & Associates in Great Neck. “Siblings fight as much as divorcing parents do – it’s amazing.”
Typically, a conflict will arise if a beneficiary wants a particular asset for himself, and the administrator thinks it prudent to liquidate and sell the asset.
“A will very often spells out what will happen to assets – whether they will be sold or distributed in kind,” Rebosa said.
Who gets what
When someone dies without a will in New York, there is a hierarchy of who inherits, beginning with the spouse and children.
“A lot of people think that if your spouse dies without a will, that you inherit everything by default,” Lanza said. “That’s not necessarily true.”
While the first $50,000 of so-called probate assets (assets that would pass through a will) go to the spouse, if there are children, the spouse splits the remaining probate assets 50/50 with the children.
If the decedent had no spouse or children, his parents are next on the list, then the siblings. (If a sibling has passed but left a spouse and children of his own, the children stand to inherit, but the spouse does not.) As Prince did not have a wife or children, and his parents predeceased him, his siblings and half-siblings – including a woman who came forward last week, claiming to be his long-lost half-sister – are in line to inherit his vast estate.
It’s important to note that many assets are non-probate assets, meaning they do not pass through a will.
“If two people own a joint bank account, it automatically goes to the survivor,” said Avi Kestenbaum, who co-chairs the trusts and estates department at Meltzer, Lippe, Goldstein & Breitstone in Mineola. “Also, if I own a life insurance policy or a retirement account, and I designate a beneficiary, it goes to the beneficiary, no matter what the will says.”
The only time a will would be relevant with regard to non-probate assets would be if the decedent schemed to intentionally disinherit a spouse.
“Someone who doesn’t want his wife to get anything might name his child as the sole beneficiary of his life insurance policy and IRA,” Kestenbaum said, noting the state offers some protections for the spouse, who in such cases must get at least one-third of the estate.
Who should have a will?
Ideally, everyone 18 and over should have a will, Lanza said, though in reality, the youngest person the attorney has ever drafted a will for was probably 25.
Even if someone barely has any assets to his name, Lanza noted that, depending on how the person dies, his estate could become valuable.
“If you’re the victim of medical malpractice or if you’re run over by a car, your estate could come into millions of dollars,” said Lanza, pointing to 9/11 as an extreme example.
It’s particularly important for parents of minor children to have a will, so they can appoint a guardian should they both pass away.
“The problem is you can have multiple family members dueling over who will be guardian,” Rebosa said. “The court will ultimately make a decision, which will involve a lot of time, expense and fighting, which is not in the best interest of the children, and the parents are giving up the opportunity to choose who will raise their children.”
It’s also vital that those who own a business and/or real estate spell out what their wishes are.
“If I leave my business or real estate equally to my adult children, who is making the decisions?” Kestenbaum said. “It’s not just about ownership; if you’re operating a business or piece of real estate, that’s where the fights really happen. People have different ideas about whether property should be sold or about how to manage it, and about who should work in the business.”
Why don’t more people have a will?
Many people avoid creating a will because they are superstitious or fearful about contemplating their own death, Kestenbaum said.
“Some are lazy and put it off, figuring they’re going to live for many more years,” he said. “A few don’t care – they figure they’ll be dead anyway. And some feel like there’s no good answer, so they’re like a deer in headlights – they can’t make up their mind.”
Generally speaking, “people don’t like to pay money to attorneys for something that they’re not facing immediately,” Rebosa said.
It typically costs several hundred dollars up to about $1,500 to have a will created, though simple wills start at $69 on LegalZoom.
In addition to a will, Lanza advises clients to create a power of attorney and healthcare proxy – to assign someone to make financial and medical decisions for them if they can’t – and a living will, which gives instructions for end-of-life medical care.
“These documents often come as a package,” he said. “If you’re missing one, it’s like having a peanut butter and jelly sandwich without the peanut butter or the jelly.”
