Estates Without Children Are Often More Complicated
As an estate planning attorney, most people I meet are seeking to leave a legacy for their children. People who have worked hard their whole lives and acquired assets want to make sure that they protect that property and pass it on to the next generation as efficiently as possible. Many people consider trusts and Medicaid asset protection strategies to shield their property from long-term care and nursing home costs and maximize the amount going to their heirs. Others are focused on efficiency and making sure that their family will be able to sell the home and wrap up the affairs quickly after they pass on.
Objectives vary significantly among people who do not have children. Some do not care what happens to their assets when they pass, but most people do. Many are extremely close with a niece or nephew or other family member, and want to plan similarly to those who have children. Others focus on charitable giving. Some delay estate planning because they just do not know where to leave their assets. It’s important to note that for people who are leaving their estate to friends or other non-relatives, wills can cause headaches.
Probate and estate administration is actually more complicated for individuals who do not have close family members. If someone passes away leaving a Last Will and Testament, everyone in the next-of-kin must be notified of the probate proceeding and must be presented with the opportunity to either consent or object. If the next-of-kin and the beneficiaries are one and the same (such as children), this process is fairly straightforward. But if the beneficiaries are friends or other non-relatives, things often become a lot stickier. The will’s Executor must locate the next-of-kin and serve them with a copy of the will, along with a form to consent to probate or a citation to come to court. This is required even if the decedent’s will deliberately excludes the next-of-kin or if the decedent did not even know his/her family. If the family members are friendly and without objections, they will sign consent forms and avoid a court citation. If they are apathetic, they will “default” (not sign the consent but also not show up for court), which will ultimately have the same result as their consent, but will take more time. If they are hostile or objectionable, they will come to court and object, beginning a process that could take many months or years to complete. And remember, all this is when someone dies having made a will, and when the next-of-kin are known and reachable!
If the Executor can prove to the court who the next-of-kin are, but cannot locate them, then the court will order publication of the matter for a period of weeks in the classified ads of the local newspaper in the region where the missing parties were last known to reside. In major metropolitan papers, these ads can cost several thousand dollars. In some cases, the Executor does not even know who the next-of-kin are. This is especially common if there is no one surviving the decedent until the level of cousins. In these cases, the Executor is required to do genealogical research and prove the identity of the next-of-kin to the court. This frequently involves looking through government, court, or ecclesiastical records, conducting personal interviews and other research. If the decedent’s family immigrated to the United States from another country, then further research may be required overseas to identify the next-of-kin. Professional genealogists serve as excellent resources in these situations and they can subcontract with researchers around the world. However, the fees for such services can amount to many thousands of dollars. Once again, all this is required even though an individual dies with a will that designates beneficiaries.
Avoiding probate by using an estate plan other than a will is especially valuable to people without children or close relatives. Designating beneficiaries on bank or brokerage accounts directly with the financial institution supersedes a will and avoids court. A financial institution will pay out directly to your beneficiaries upon death, with just a death certificate and some basic forms completed.
Similarly, living trusts can be valuable tools to efficiently pass on real estate, bank accounts, securities, and other assets. While wills are instructions for after you pass away, living trusts are effective immediately. Bank accounts and real estate can bear the title of the trust. Upon your passing, the assets will go to the designated beneficiaries of the trust without the need for court involvement. This can save a significant amount of time, money, and stress for beneficiaries, and will avoid the complications of probate.
People without children most commonly choose revocable living trusts. These trusts allow for them to be in full control of their assets, and live normally, with unlimited access to both income and principal. These trusts have the benefit of avoiding probate and providing a succession plan in the event of disability. They do not protect from long term care costs or creditors, but often this is not the priority of someone leaving their estate to more distant beneficiaries.
Whether you have a close-knit family or are unsure of where to leave your assets, it’s advisable to have an initial conversation with an estate planning attorney while you are healthy and well. It’s better to know your options and consider making a plan, rather than let the state make that plan for you.
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Michael Wagner is an associate concentrating on elder law and estate planning. He can be reached by phone at 866-303-9595 toll free or 845-764-9656 and by email.
