Estate plans a must for all
They’re not only for wealthy individuals. Written estate plans ensure assets go to the right people.
More than half of U.S. parents do not have a will, and many Miami Valley residents die without the legal documents, although it means the government decides how to distribute the assets of the deceased and the courts can be put in charge of custody decisions, according to a Dayton Daily News review of local court data and national studies.
About one in five estates in the Miami Valley last year were “intestate,” meaning they lacked wills, which can lead to disputes among surviving family members over inheritances and often carries unintended financial consequences, experts said.
In the absence of a will, Ohio estate law favors heirs most closely related to the deceased. But modern family relationships are complicated and often involve ex-spouses, stepchildren and step-grandchildren.
Estate plans ensure assets go to the right people. Wills also designate successor guardianship for minors.
“Leaving things up to the state laws of intestacy is sort of counterintuitive to carrying out your intentions if the legislature does not see things the way you do,” said Bill Kirchick, an attorney with the Boston office of Bingham McCutchen LLP and a board member with the National Association of Estate Planners and Councils.
Avoid big risk
About half of Americans with children are taking a big risk with their families’ futures by not having a will, according to a survey released earlier this year by Rocket Lawyer, an online provider of legal services based in San Francisco, Calif. Even 41 percent of baby boomers who are between the ages of 55 and 64 do not have a will, the survey found.
Many people create a will when they have a child or retire. But many don’t.
In 2011, about 659 estate cases were opened in Montgomery County Probate Court that did not have a will, or about 24 percent of all cases, the court said.
About 15 percent of estates in probate court in Greene County and 20 percent in Butler County lacked wills.
In Warren County, only 63 full estate administrations out of 711 were filed as administrators without wills.
Most people without wills say they do not have them because of procrastination, or they believe they do not have enough assets to need the legal documents, according to the Rocket Lawyer survey. Other people believe they cannot afford them.
But without a will or an estate plan, assets will be divided up based on Ohio’s intestacy statute, which follows a predictable formula but may not follow the wishes of the deceased.
And most people have some assets, such as vehicles, real estate and savings, that may be distributed according to the state intestacy law.
“Nobody is going to say they want the government to make that decision” of how to distribute assets, said Charley Moore, founder and executive chairman of Rocket Lawyer. “And yet that’s exactly what happens in an intestate situation.”
Passing on assets
Estate plans are the method by which people make sure their assets and “legacy” pass on to the right people, and the documents ensure loved ones are taken care of, Moore said.
Family dynamics are more complicated these days, and a person’s wishes may not align with state law, which typically gives everything to the surviving spouse or children in a onetime transfer of assets.
Some people want to leave money and property to some biological children but not others, who may have drug problems or who are irresponsible with money.
People often want to make sure their children from a first marriage receive support, without neglecting children from second or third marriage.
More than half of first marriages end in divorce, and most people who divorce will remarry.
Some people want to leave assets to friends, churches, favorite charities, and other extended family members, such as uncles and aunts.
But this will not happen without a will. Some people may even have life partners who are not recognized by law, such as same-sex couples.
Defining the terms
Estate plans also dictate in what amounts the assets are divvied up among beneficiaries, and the documents can set conditions for receipt of the assets to protect loved ones against financial mismanagement or fraud by caretakers, said Kirchick, the attorney with Bingham McCutchen LLP.
People through trusts can require their children to finish college or hold down a job in order to receive their inheritance.
Many people do not want to transfer all of their assets outright to children or young adults, but instead pass them out over time, Kirchick said.
Wills also designate guardianship of minors, which can prevent fights over custody, and wills and trusts that specify how assets are to be divided and disposed of often prevent families from squabbling over money, possessions and real estate, he said.
“When we see families where (there are no wills attached to the estate), the heirs sometimes get the feeling that, ‘Oh, mom didn’t care about me enough to take care of these issues before she died,’” he said.
“It becomes personal.”
A lack of a will often signals that the deceased’s business and legal affairs are so disorganized that they cannot be sorted without the help of a lawyer or business professional, which can be pricey, said Kevin Robertson, acting chairman of the Estate Planning, Trust and Probate Law section council for the Ohio State Bar Association.
“If you never took the time to make a will, you probably weren’t taking your time in your life to organize your financial affairs in any rational way that a person who must pick up the pieces can do it very easily,” he said.
Joe Burger, 27, who works as a pilot out of Columbus, said he and his fiancee, Amber Murray, recently created wills through Rocket Lawyer because he wanted to make sure she and her 6-year-old son, Zander, were taken care of if he died; Murray wanted to designate Burger as Zander’s guardian.
Burger said creating the will took less than half an hour to complete, and he felt relieved once it was notarized.
“You know you aren’t leaving things to chance,” he said.