By Craig Panholzer, Esq. and Michael Salad, Esq.
A recent survey indicates that more than 70% of Americans do not have a last will and testament. The speculation as to why many fail to plan for the inevitable is often attributed to confusion as to what an estate plan entails. Many individuals believe it is only reserved for the highest income earners. Many others mistakenly believe their loved ones will fairly and honestly distribute their assets in accordance with their perceived wishes. Establishing an estate plan not only addresses what happens to an individual when they pass away but may also control financial and medical wishes while an individual is living.
An estate plan often includes a living will and advance directive for health care in which an individual may specify health care wishes and nominate a health care representative. Similarly, while an individual is of sound mind, an individual may nominate an agent under power of attorney to address day-to-day affairs far easier and more cost effective than court intervention, which can involve a formal guardianship proceeding.
If a person passes away without a will, it is known as intestacy. In many jurisdictions, the intestacy probate process is difficult, time-consuming and expensive. Probate is generally a court process in which an individual’s assets are distributed to beneficiaries after taxes and debts are paid. Florida law requires petitioners seeking to open probate to retain a licensed Florida attorney. In New York, it is common for petitioners to wait over a year before their first initial pleading is reviewed. The length and complexity of probate may significantly delay distribution of assets to beneficiaries.
Additionally, in intestate matters, state laws dictate who is entitled to probate an estate. The person who handles probate after a person passes away is known as an executor (also referred to as personal representative and administrator in certain circumstances). The intestacy laws may result in the appointment of a person who is not equipped to serve as an executor and/or whom the decedent would not have selected to serve as executor. If multiple family members have equal priority to serve as an executor of an intestate estate and they are unable to agree upon who will serve, a court may intervene, which is often an expensive and contentious process.
The intestacy process often results in undesirable inheritance results. Many individuals mistakenly believe that either their spouse is entitled to receive all assets or their children will receive all assets. Allocation of assets differs from state to state but is often not the outcome that an individual would have desired if the person had prepared a will. Most of the uncertainty surrounding intestacy may be avoided by implementing an estate plan.
It is important to speak with an experienced estate planner to thoroughly examine your options before finalizing an estate plan.
Craig Panholzer is an attorney in Cooper Levenson’s Business & Tax practice group in its Florida office. He concentrates his practice on business transactions, estate planning, special needs planning, probate and tax matters. Craig may be reached at (954) 889-1856 or via e-mail at cpanholzer@cooperlevenson.com.
Michael Salad is an attorney in Cooper Levenson’s Business & Tax practice group. He concentrates his practice on estate and asset protection planning, probate and trust administration, special needs planning, business transactions, mergers and acquisitions and tax matters. Michael holds an LL.M. in Estate Planning and Elder Law. Michael is licensed to practice law in Florida, New Jersey, New York, Pennsylvania, Maryland, Connecticut, Georgia, Massachusetts, Alabama, Arizona, Virginia and the District of Columbia. Michael may be reached at (954) 889-1850 or via e-mail at msalad@cooperlevenson.com.
The content of this post should not be construed as legal advice. You should consult a lawyer concerning your particular situation and any specific legal question you may have.