Should I Have A Will?

by David Goldfarb Goldfarb Abrandt & Salzman LLP

Intestate or Testate

A person who dies with a will is said to have died testate. A person who dies without a will dies intestate. In either case, the person who dies is called the decedent, and the property the person leaves at death is called the his or her estate.

It is always preferable to have a will. A will states your preference as to the disposition of your estate. A will can and should be changed as your circumstances and preferences change. Even if you take measures to avoid probate, you should have a will as a back-up. A will should always be drawn up by a qualified attorney familiar with your financial circumstances, family situation and your wishes for your estate.

Intestate (No Will)

When a person dies without a will the law decides how, by whom, and to whom a decedent’s estate will be distributed. Persons receiving property are called “distributees.” The person in charge of distributing the estate is the “administrator.” Some property may pass automatically or outside the estate, such as joint accounts, accounts that are “in trust for” another person, or property in a lifetime or living trust. However, this property is still in the taxable estate and will be taxed.

Under New York law of intestacy, if the decedent has no children and leaves a spouse, the spouse takes all. If the decedent leaves a spouse and one or more children, the spouse receives $50,000 plus one half the balance and the children share the rest. If a child predeceases, that is, has died before the decedent, and he or she leaves children, then such grandchildren take the share that would have gone to the deceased parent.

If there is no surviving spouse nor children, nor grandchildren living at the time of the death of the decedent, next in line would be the parents of the decedent (if either of them is still living). If there are no living parents, then brothers, sisters, nephews and nieces, aunts and uncles, and finally cousins inherit the estate in that order. Many times this is not the wish of the decedent. That is why having a will is so important.

The administrator is the person who will take charge of collecting and distributing the property of the person who dies without a will. The law decides who shall be the administrator in an order similar to the order distributees inherit as described above. The administrator petitions the court for letters of administration. These are authority from the Surrogate’s Court Judge to act on behalf of the estate. Banks, brokers and transfer agents can then transfer property from the name of the decedent into the name of the estate. The administrator after paying funeral expenses, debts, and taxes can then distribute the property to the distributees in the shares provided by law.

Testate (With a Will)

With a will a person has control over how and to whom his or her property shall be distributed after death. There is one exception, you cannot disinherit a spouse. By law a surviving spouse where there are no children can elect to receive one half the net estate or one third where there are children, even if he or she was left less under the will or through various testamentary substitutes (joint accounts, trusts, etc.).

In a will, the decedent names an executor to collect, administer and distribute the estate. The executor may be a relative, friend or even a trust company or a bank. The executor or excutrix (if female) selects a lawyer to assist in probating the will.

The attorney on behalf of the executor files a probate petition with the Surrogate’s Court requesting the issuance of letters testamentary. These letters enable the executor to transfer stock, bank accounts and other property into the name of the estate. The executor first pays funereal expenses, debts and taxes and then distributes in appropriate shares the estate to the persons named in the will.

A will is also important not just to convey property as you desire, but for other matters. For example, you can indicate your preference for the guardianship of minor children. A will can also incorporate various tax planning techniques.

The person executing a will (the testator) must deceide where the original will be kept. Some attorneys at the client’s request keep the original will in their safe or in an attorney’s safe deposit box at a bank. Other attorneys give the original will to the client. In either event, the original must be kept in a safe place which is easily accessible when the testator dies. If the testator does not keep the original, he or she should have a copy clearly marked where the original is kept.

Estate Taxes

Both the Federal Government and the State of New York impose death or “estate” taxes. It is no longer a combined estate and gift tax. New York has abolished its gift tax and does not impose a tax on combined estates and gifts under $1,000,000. The federal government has an exemption which changes each year ($3.5 million in 2009). See The Estate Tax Is Back, but with Some Twists—and Opportunities. The estate tax can be quite high on larger estates, ranging up to 45 percent just for the federal tax. The taxable estate contains many items which pass outside the probate estate such as joint accounts, “in trust for” accounts, and life insurance. There are also many exemptions. Both the state and federal threshold for estate and gift taxes are changing over the next few years. An experienced attorney must be consulted on a larger estate for proper estate tax planning.

The best advice is to always have a will and to have it drawn by an experienced attorney familiar with your financial situation and your wishes. A change in circumstances such as a marriage, birth of a child, or the death of a spouse will often trigger the need to change your will. No estate is too small for a proper will. If you want your legacy to go where you desire you must have a will. The cost of drafting a will is one of the least expensive services a lawyer can provide for you. It is well worth the investment of your time and money.

Jurisdiction of the Surrogate’s Court

In New York the Surrogate’s Court has jurisdiction over all matters relating to estates and affairs of decedents who die with or without a will. It also has jurisdiction (along with other courts) over lifetime trusts and adoptions.

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