Legacy Assurance Plan: intestate succession

Sunday, January 28, 2018

Can the Government Get 100% of Your Assets When You Die?

Summary: We all probably have slightly different ideas about what we want to happen to our wealth when we die. Chances are fairly high, though, that few if any of us have, as out preferred plan, leaving everything to the government. However, that can and does happen. It happens when people who have no immediately known living relatives fail to create an estate plan. Having all of your assets revert to the government is just one of many unfavorable outcomes that can occur as a result of failing to plan. You can avoid these and take control of your legacy by taking the pro-active step of getting a complete estate plan without delay.

Chances are, most everyone knows the word “cheat” and what it means. On the other hand, chances are that most everyone is not familiar with the word ”escheat.” Escheat, as it turns out, has nothing to do with cheat. The concept goes all the way back to the system of feudalism that existed in Medieval times. It meant that, in certain situations, a property might, upon the death of the owner, go to a lord or perhaps to the King.

Today, the word still exists in law, and refers to a circumstance where property reverts back to the treasury of the state in which it is located. How can the government end up getting your property when you die? The first thing that has to happen is that you have to have created no estate plan. If you have executed a valid will or living trust, then your assets will be distributed according to the instructions you put into your estate planning document(s). So, if you have a valid plan in place, there is virtually no way that your assets can escheat to the government. If you have no plan in place, though, that’s where things can get tricky. In that scenario, the law says that your assets are to be distributed according to the rules of intestate succession.

What is “intestate succession”? Intestate succession means the system for distributing estates when there were no estate planning documents. The rules of intestate succession were created under the theory that assets should transfer upon death to a deceased person’s closest living relatives.

For most people, they die leaving behind a spouse, children or both. Several others may also be survived by grandchildren, siblings, parents, aunts/uncles, nieces/nephews, cousins and so on. The intestate succession system starts with the closest relatives (spouse/children) and works outward from there in search of a relative to whom the assets can be distributed. Sometimes, it is exceedingly difficult to find these heirs. One of the jobs that a professional genealogist might do is finding these long-lost relatives in complicated cases.

Remember the old screwball comedy movies from the 1980s and beyond where the film’s main character gets a letter from out of the blue stating that he/she has inherited a large sum of wealth from some distant relative he/she barely remembers or didn’t know at all? That can actually happen. Take the case of a central Florida genealogist named Jerry, as reported by a news channel from Orlando. According to Jerry, an inability to find heirs to instate estates (and the assets in those estates reverting back to the government) “happens more often than people realize.”

Back in January, Jerry was working on the estate of Lydia, a Puerto Rican woman who, at the time of her death in 2012, was a legal resident of New York. When Lydia died, she had no surviving spouse or children. Jerry had identified her parents and a brother who served in the Korean War. At the time that Jerry discussed the case with news agencies, though, no living relatives had been found. If the search fails, then Lydia’s entire ONE MILLION DOLLARS will go to the State of New York.

Reference:

Bechara, Stephanie. (2018-01-24). Kissimmee genealogist searches for heir to Puerto Rican fortune. Retrieved from: http://www.mynews13.com/content/news/cfnews13/news/article.html/content/news/articles/cfn/2018/1/24/kissimmee_genealogis.html

This article is published by the Legacy Assurance Plan and is intended for general informational purposes only. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal advice. You should consult with an attorney regarding any specific questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services-company and is not a lawyer or law firm and is not engaged in the practice of law. For more information about this and other estate planning matters visit our website at www.legacyassuranceplan.com.

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Legacy Assurance Plan

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Friday, January 12, 2018

Get an Estate Plan to Make Sure Your Planning Goals Will Be Achieved

Summary: Some people's estate planning needs can be met effectively through the rules of intestate succession. The problem is that the percentage of people for whom that is true is very, very small. That number is much smaller than the number of people who currently have no plan and who, if they died today, would have their estates go through intestacy. There are many reasons why you might need a plan. Maybe you have an ex-spouse who you want to have a role in your estate plan. Maybe you have a beneficiary whom you want to receive assets at a future (such as graduation, marriage, etc.) In these and many more scenarios, executing a detailed and well-crafted estate plan is the right way to take control of your legacy.

Sometimes, a story may involve some very unique facts but still may provide some lessons that can apply to a wide audience. Take, for example, a recent court case from Illinois, which included some unusual facts, but nevertheless contains some estate planning reminders that many should heed.

The case involved a man named Finis, who was in his 60s and who had no estate plan. He did have some possessions that he owned, including a Jeep SUV. He also had some estate planning goals. As his health deteriorated and his time grew short, Finis stated that he wanted the Jeep to go to his young grandson, Rakayne, who was still in high school. Finis stated that he wanted his ex-wife (Rakayne's grandmother) to hold possession of the SUV until the grandson graduated high school, at which point the grandmother was to transfer the title on the Jeep to the grandson.

Despite these very clear and very specific estate planning objectives, Finis still did not get an estate plan. The fact that you are in poor health, or even on your death bed, does not prevent you from obtaining an estate plan. As long as you have your mental competency, you can create a plan. Finis, however, died without a plan in early May of 2014. Rakayne, who graduated high school in May 2015, received title to the Jeep in April 2015.

Along the way, though, there was a problem. Finis's son, Antwan, who was also Rakayne's father, had used the Jeep in a theft crime. This led to the State of Illinois invoking that state's forfeiture laws and taking the Jeep. The court case was full of peculiar facts. Antwan told authorities that Finis left the Jeep to him, which was impossible because Finis never executed an estate plan. Rakayne's grandmother claimed that she was entitled to transfer the Jeep to Rakayne because she received the Jeep through intestacy. That was also impossible because she was Finis's ex-wife and ex-spouses don't receive anything under the rules of intestacy (in Illinois or anywhere else.)

So, even if you never have a run-in with law enforcement, or have had to deal with your state's forfeiture laws in any way, there's still a lot to learn from this family's unfortunate situation. First, the rules of intestate succession are very much a "cookie-cutter" type of plan of distribution. If you have any unique circumstances in your life, such as an ex-spouse whom you want to receive or handle the distribution of certain assets, then that raises the very high probability that doing nothing (and relying on intestate succession) likely isn't the best way to go.

Second, if you have specific goals you want to accomplish in terms of estate planning, don't leave things open to uncertainty. Take control of your legacy and create a plan. That way, you are the one dictating what will happen to your assets. At the very least, get a plan with a last will and testament, in which you can enshrine you preferences and objectives in a valid and enforceable written document. In Finis's case, he might have benefited from even more extensive planning than just a plan with a will. He had some specific goals he wanted to accomplish in terms of leaving a distribution to his underage grandson. If he wanted someone else, like the boy’s grandmother, to hold possession and title of the vehicle until a future date, like the boy's graduation, a plan with a trust might have been helpful. With trust planning, you can dictate, not only who gets each asset, but also when they get them, and who should oversee and manage your assets until those future dates occur.