The week of October 21-28, 2019 is National Estate Planning Awareness Week. The purpose of National Estate Planning Awareness Week is to educate the public about the importance of estate planning. So, in that regard, this article will address what happens when someone dies without a Will.
Even if you have never sat down with an attorney or scribbled your wishes for the distribution of your assets on a cocktail napkin[1], you currently have an estate plan. If you die without a will you are deemed to die “intestate.”[2] If you die intestate, your estate plan is the default distribution rules under New York Estates, Powers, and Trusts Law (“EPTL”) §4-1.1.
Probate Property vs. Non-probate Property (Where Will My Stuff Go Part I)
Upon your death, your property is classified one of two ways. Property is either, “probate property” or “non-probate property.” The classification of your property as either probate property or non-probate property determines how the property passes.
Probate property is all property that does not have a designated beneficiary, examples of probate property are: cars, jewelry, cash, bank accounts, business assets, and the like. Basically, any property you own upon your passing where you have never designated a beneficiary will be considered probate property. Probate property either passes via your Will, or if you do not have a Will under the default distribution rules EPTL §4-1.1, which will be discussed below.
Non-probate property, is just the opposite of probate property, in that non-probate property is all property that has a beneficiary designation. Examples of non-probate property are IRAs, brokerage accounts, life insurance policies, and some real estate depending on the form of ownership. Non-probate property passes to the designated beneficiary in the case of an IRA, life insurance policy, or similar asset; or to the surviving joint tenant, in the case of real estate owned as either joint tenants with the right of survivorship[3] or tenants by the entirety[4]. Non-probate property passes outside the purview of the Surrogate’s Court, directly to the designated beneficiary.
Intestate Succession under EPTL §4.1.1 (Where Will My Stuff Go Part II)
For anyone dying intestate, all probate property will pass via the provisions of EPTL §4.1.1. Pursuant to EPTL §4.1.1:
A. If you are survived by a spouse and have no children or grandchildren, all of your probate assets pass to your spouse.
B. If you are survived by a spouse and are survived by children or grandchildren, $50,000 and half of the remainder of your probate assets will pass to your spouse and the other half of your probate assets will pass to your children or grandchildren by representation[5].
C. If you are survived by children or grandchildren, but do not have a spouse upon your passing, all of your probate assets will be distributed to your children or grandchildren by representation.
D. If you are survived by one or both of your parents, and do not have a spouse or children, or grandchildren, upon your passing, all of your probate assets will be distributed to your parents equally or to your surviving parent.
E. If upon your passing, you do not have a spouse, or children, or grandchildren, or a surviving parent, all of your probate assets will be distributed to your surviving siblings or nieces and nephews by representation.
F. If upon your passing, do not have a spouse, or children, or grandchildren, or a surviving parent, or surviving siblings, or surviving nieces or nephews, all of your probate assets will distributed one half to your surviving maternal grandparent or grandparents or their children and grandchildren (your aunts, uncles and first cousins) by representation and one half to your surviving paternal grandparent or grandparents or their children and grandchildren (your aunts, uncles and first cousins) by representation.
G. Lastly, if upon your passing, do not have a spouse, or children, or grandchildren, or a surviving parent, or surviving siblings, or surviving nieces or nephews, or surviving grandparents, aunts, uncles, or first cousins, then all of your probate assets are distributed one half to your surviving maternal grandparents’ great-grandchildren (your second cousins) per capita[6] and one half to your surviving paternal grandparents’ great-grandchildren (your second cousins) per capita.
A Final Word of Caution
Even if the intestate distribution rules provide the exact way you wish to distribute your probate property, a formal estate plan is still a better option. For one, a formal estate plan will include more than just a way of distributing your assets upon death. You will also execute a Health Care Proxy, to appoint someone to make health care decisions for you when you cannot make them for yourself; a Power of Attorney, to appoint someone to handle your day-to-day finances for you when you cannot handle them on your own; and a Living Will, which provides your wishes for care at the end of your life. If you do not have these critical documents in place, if a need arises a guardianship proceeding will need to be commenced to appoint someone to handle your health and financial decisions for you, at an unnecessary cost and delay.
Second, in a Will you will be doing a lot more than just distributing your assets. You will appoint an executor, to administer your estate. Without a will someone will have to petition the Surrogate’s Court to be appointed as administrator of your estate. More than one person can petition to be your administrator and a legal battle can ensue. Or the person best suited to be administrator may not step up and your estate will be administered by a less qualified administrator, potentially delaying or adding additional cost to your estate’s administration.
Third, and most important, if you have minor children, your Will can appoint a guardian for those minor children. Similar to when you do not have a Power of Attorney or Health Care Proxy, if no guardian is appointed for your children a court proceeding must be held to determine the guardianship of your children.
Even if you think you have the most vanilla possible circumstance, in my experience, everyone has a unique situation and can benefit from at least one aspect of professional estate planning. The estate planning attorneys at Twomey, Latham, Shea, Kelley, Dubin & Quartararo are available at your convenience to answer your questions, review your current estate plan to ensure it continues to meet your needs or to discuss the implementation of an estate plan.
[1] Scribbling your wishes for the distribution of your assets on a cocktail napkin is referred to as a “holographic will.” Holographic wills are invalid in New York State, unless they are written by a mariner at sea or a solider in combat, and even then such wills are only valid for a short period of time. See New York Estates, Powers, and Trusts Law §3-2.2.
[2] If you die with having left a Last Will and Testament you are deemed to have died “testate.”
[3] Joint Tenants with the Right of Survivorship is a way to own real property with another person or people, whereas the surviving owner or owners receive your share of the property upon your passing, rather than your share passing to your heirs.
[4] Tenants by the Entirety is a special ownership form for married couples only, that in addition to providing the same survivorship provisions as Joint Tenants with the Right of Survivorship, also gives the owners additional benefits beyond the scope of this article.
[5] “By representation” is best described via example. If you have four children, and two of the children predecease you, your property will be divided into four shares, one for each child. The surviving children would each get one share or a 1/4th share of the whole, the children of the first predeceased child would divide his 1/4th share and the children of the other predeceased child would share her 1/4th share. See EPTL §1-2.16.
[6] “Per capita” means that each heir will receive the same amount. This differs from “by representation” when, using the example in footnote 5, two of four children have predeceased you, with one predeceased child having two children and one predeceased child having three children. In “by representation” distribution the three children of the first predeceased child would split is 1/4 share and each get 1/12th of the whole and the two children of the second predeceased child would split her 1/4 share and each get 1/8th of the whole. In “per capita” distribution all five children of the two predeceased children would share in the 2/4ths distribution to the children of the predeceased children and each would therefore receive 1/10th of a share of the whole. See EPTL §1-2.11.
