ARTICLES
What Happens if You Don't Have a
Will?
The lack of proper estate planning can have dire consequences,
putting loved ones’ welfare at risk, increasing expenses, and
causing unnecessary taxes. In our example, Dr. Susie Smith is 43, and has two children, ages 10
and 8. Her husband, Joe, 45, is a school teacher. Susie and Joe’s
major assets are a house worth about $500,000, Susie’s retirement of
$225,000, Joe’s IRA of $50,000, and Susie’s life insurance of $2
million. Joe has a life insurance policy of $500,000. Their only
substantial debt is their mortgage, currently. Susie and Joe haven’t gotten around to having an estate plan
prepared – they don’t even have simple wills. One night while
returning from an evening out, another car runs a red light and
smashes into their car. Susie is killed immediately, while Joe is
hospitalized with severe injuries. He dies the next day. Susie’s sister, Sarah, who lives in a neighboring city, is appointed
as guardian. Because Susie and Joe did not always see eye to eye
with Sarah when it came to raising children, they had wanted Joe’s
brother, who lives in another state, to be guardian. However, with
no will to name a guardian, the court was free to choose Susie’s
sister, which it did because the judge preferred to name a resident
of North Carolina as guardian. Sarah then assumes legal control of the children and their
inheritance until they are 18. Susie’s estate was worth about $2,325,000 when she died. There was
no estate tax because everything went to Joe by way of joint
ownership or beneficiary designation. However, when Joe died, his
estate was then worth $2,975,000. Because the current estate tax
exemption is only $2 million, and the combined federal and state
estate tax rate is about 50%, the tax bill of almost $500,000
reduced the children’s inheritance substantially. The $2.5 million that was left was required by law to be placed into
the guardianships for the children. The use of guardianship funds is
severely restricted by law, and the funds will be depleted by
compensation for Sarah, bond premiums, attorneys’ fees and other
expenses. Guardianships end at age 18, so the children will receive
the remaining funds at that age, regardless of their maturity or
ability to responsibly manage the money. These are only some of the problems that can arise when ones dies
intestate. Having a current Will and other estate planning documents
will give you the peace of mind of knowing that you have done what
you can to protect your loved ones. Please contact us today or call us at
800-201-0413
Email:
info@trustcounselpa.com |
