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WHY DO I NEED A WILL? 3 HORRIFIC EXAMPLES:

6
Dec

By Jason Stern

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Why do I need a will? 3 Horrific Estates gone wrong:

When I speak to clients I am always surprised to hear how much they think they know about Living Trusts and Life Estates. But clients often have no idea why they actually need a will. This is very disturbing to me on many levels. First, most of their information is disseminated from people they know who have received misinformation at legal seminars. Most of these seminars are held by New York lawyers and designed to induce unsuspecting clients into setting up expensive trusts they do not need.

Secondly, any New York lawyer practicing estate law for as long as I have will tell you that every single person should have a will with very few exceptions. Unless you are a very wealthy individual and your estate is in excess of $10,000,000.00 you need a will. As of the date of this article, $10,240,000.00 is the legal amount of estate assets a married couple can pass onto their beneficiaries without any Federal Estate Tax liability. However, even when planning estates for high net worth individuals in excess of $50,000,000.00, we always start with a will while adding more sophisticated trust strategies as we go. If you are wondering, why do I need a will, just look at the three instances cited below.

The following are 3 horrific instances which explain why everyone needs a will:

1. Estate of Chiu . This was a woman who had just lost her husband after he committed suicide. He left behind a wife, 18-year-old son and no will. The main assets of the estate were the family home with an estimated value of $2 Million in Queens and a $1.5 million account with stocks, bonds and no beneficiary. This scenario is an estate nightmare because when someone dies in the State of New York the Administration Laws control the distribution of their estate. Pursuant to those laws, if you die without a will in the State of New York half ½ of your estate passes to your spouse and half ½ will pass to your children. The result stemming from this tragedy was most certainly not what this decedent intended. For better or for worse the decedent’s 18 year-old son was soon to be the recipient of $750,000.00 in stocks and a half interest in the $2 million house. Fortunately for the decedent’s wife she had a good relationship with her son and was able to mitigate some of the damage caused by this nightmare. Had her son not agreed to work with Mrs. Chiu she would have lost her house and been left with substantially less money than she expected. There is a common misconception among people that when they die their inheritance automatically passes to their spouse. As you see here this is not so. Additionally, had her son elected to keep his distributive share any inheritance he collected would have triggered the State Estate Tax creating a tax liability for him. On the contrary, the decedent’s wife benefits from the spousal estate tax exemption excluding Estate Tax on her portion the inheritance.

2. Estate of Holmes . This case involved a man named Clayton Holmes who wanted to leave his house to his late wife’s daughter who was not blood related. Knowing that if he died intestate (without a will) the house would pass directly to his estranged children, who he had no relationship with, while his intended beneficiary would be excluded from his estate. Rather than hiring an attorney to draft his will for a few hundred dollars, Clayton Holmes went online, downloaded a will from a legal website and decided to execute his will himself. Mr. Holmes did an excellent job except he signed the will in the wrong place. Eventually Clayton Holmes’s blood children contested the will in Queens Surrogate’s Court and the will was denied probate. As such, Clayton Holmes’s estranged children inherited the property pursuant to New York State Administration Laws and evicted his stepdaughter, the longtime resident and intended beneficiary, from her own home. Had Clayton Holmes spent the $300.00 for an attorney drafted will the $400,000.00 house would have passed directly to his stepdaughter pursuant to his will without a problem.

3. Estate of Wong . Mr. Wong was an Asian American business mogul who immigrated to America in the 1970’s. Over the course of 30 years, he built an entire hotel empire in NYC from scratch currently valued at over $80 million. Mr. Wong died in 2012 without a will. Since his death more than 22 illegitimate children from 7 nations have come forward claiming their kinship right to inherit from his estate. Had Mr. Wong had a will, his estate would have been divided evenly amongst his wife and marital children. However, it is alleged that Mr. Wong’s wife was actually his illegitimate second wife and was unable to produce either a valid marriage certificate from her marriage or divorce decree from Mr. Wong’s previous marriage. Under the intestacy laws of New York, as bigamous marriages are not recognized, unless Mrs. Wong produces both of these documents she will likely not be entitled to her FIFTY-PERCENT (50%) share of her husband’s inheritance, about $50,000,000.00. To make matters worse, because Mr. Wong died without a will, providing for testamentary trusts or estate planning, his estate will owe approximately $50,000,000.00 in Federal and State Estate Tax liability as well as a substantial administrator’s fee to the State. This is easily one of the most expensive estate catastrophes in United States history. What is sadder is this financial catastrophe could have easily been avoided with a will and some basic estate planning instruments.

These are just three instances that are all based on actual cases. In any of these scenarios having an attorney drafted will would have avoided most of these financial hardships. If you think that the three cases above are extreme and unusual think again. As a New York kinship and probate lawyer, I see these scenarios over and over again every single day. If you just change the names and the values of the estates the fact patterns are usually similar. Even clients who choose to place their property in life estates for various purposes always need a will to account for all property outside the life estate.

If you or a loved one is in need of a New York probate lawyer to draft a will or administer an estate call one of our New York estate attorneys at the Law Offices of Jason W. Stern & Associates at (718) 261-2444.