When someone dies without a will, the assets owned by that person do not pass to the State. Rather, the laws of the State where one resides determine who the assets are distributed to. Generally speaking, the people who inherit are the closest living relatives. In New York, for example, all the property owned by the decedent would go to the spouse, assuming there are no children or grandchildren. If there is a spouse and children, the spouse is entitled to the first $50,000 of the decedent’s property, and the remainder is shared equally between the spouse and children. If there is no spouse nor children, then the assets would pass to parents, siblings, nieces, nephews, etcetera. Each State lists a hierarchy of the family members who will inherit.
Regardless of whether you die leaving a will or not, a court process is still required in order to transfer the assets to the beneficiaries. If intestate, the process is referred to as an administration proceeding. If testate, it is called a probate proceeding. In both New York and Florida the two procedures are not much different from one another, although the courts will often require the posting of a bond where there is no will, which involves an additional expense. The most important consequence of dying without a will is that the State determines where the assets go. If you make a will, you can not only name beneficiaries, and the amounts and/or percentages they are to receive, but you can name the Executor, or person in charge of your estate, and you can also establish trusts for minors, disabled individuals and others.
While Florida probate and administration has always been more compli- cated and lengthy, the process in New York has and remains relatively straightforward. In the past, the process in New York was relatively quick, accomplished in just weeks, depending on which county the decedent resided in. In recent years, the process in all counties has been taking several months, and in some cases even longer. Of course, one solution is to name beneficiaries on one’s brokerage, savings, checking and other accounts. Doing so avoids probate for those assets, but the beneficiary designation supersedes the terms of one’s will, which may or may not be desirable. Especially in the case of a married couple with an estate tax problem, having beneficiaries may not be a good idea. Regardless, one can not name beneficiaries on one’s real estate or cooperative apartment, so probate will not be avoided entirely. In that case, a revocable trust might be a good idea.
In summary, it is important to have an experienced attorney review your particular situation and then decide whether a will or trust is best for you.
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IRS Circular 230 disclosure: We inform you that any tax advice contained in this communication is not intended or written to be used, and may not be used by your or anyone else for the purpose of avoiding penalties imposed under the Internal Revenue Code.