What does having a will accomplish? To answer that question we need to consider what would happen if you were to die without a will and that requires a brief discussion of New York Estates, Powers and Trusts Law (“EPTL”). A person who dies is called the “decedent”. If the decedent died with a will they are said to have died “testate”, if the decedent died without a will they are said to have died “intestate”.
All property that is held jointly with another person will automatically become the property of the survivor (E.g., joint bank accounts, real property held as joint tenants with the right of survivorship or as tenants by the entirety, etc.). All property that has a beneficiary designation will become the property of the beneficiary so designated (E.g., life insurance policies, retirement accounts, etc.). All property that is held individually and which does not have a beneficiary designation (e.g., individually titled bank accounts, stocks/bonds/investments without beneficiary designations, real property owned individually, etc.), will pass by will if the decedent dies testate or according to law if the decedent dies intestate.
If the decedent dies intestate, without a will, the disposition of all property owned by the decedent individually (and which does not have a beneficiary designation) will pass according to EPTL Section 4-1.1. EPTL Section 4-1.1 provides, in part, is as follows:
If a decedent is survived by:
(1) A spouse and issue (e.g., children and grandchildren), $50,000 and one-half of the remaining intestate estate will go to the spouse and the balance to the issue.)
(2) A spouse and no issue, the whole intestate estate will go to the spouse.
(3) Issue and no spouse, the whole intestate estate will go to the issue.
(4) One or both parents, and no spouse and no issue, the whole intestate estate will go to the surviving parent or parents.
(5) Issue of parents (I.e., the decedent’s brothers and/or sisters), and no spouse, issue or parent, the whole intestate estate will go to the issue of the parents.
As you can see, there are many drawbacks to the statutory formula. Some of those drawbacks being that the distribution of the decedent’s intestate estate is very formal and objective, the statute does not take into account the wishes of the decedent or the needs of the family members that may be left behind, it does not provide for step-children who have not been formally adopted and it does not take into consideration family members with special needs. The person who will administer the decedent’s intestate estate is also determined by statute.
Many people may think that they don’t have enough money or assets to necessitate having a will but your will can do much more than just designate the beneficiaries of your estate. Having a will allows you to have control over many aspects of your estate, it allows you to dispose of your assets according to your wishes subject to certain rules with respect to spouses, leave charitable bequests, appoint a guardian for your minor children, appoint the person who will take care of your estate once you die, this person is referred to as your “personal representative” or “executor”, create trusts for minors and/or persons with disabilities, among many other things. Even if all of your assets are held jointly or with named beneficiary designations, it is still important to have a will as a back-up. In addition, having a will in place may allow you to avoid federal or New York estate tax.
Some people may be unsure as to what the future holds for them and as a result they are hesitant to create a will because their personal situation could change. This is not a reason to hold off on creating a will. A will can be revoked and amended as many times as you wish, in fact we recommend to our clients that they review their personal situation every two or three years to ensure that their estate planning documents still accomplish their ultimate goals.
At the time you execute your will you should also consider executing a Power of Attorney and Health Care Proxy as these are very important estate planning documents as well.