WHY YOU NEED A WILL RIGHT NOW: PROBLEMS WITH INTESTATE DISTRIBUTION

How many of you don’t have a Last Will and Testament drawn up? How about your adult children or grandchildren?  There are many reasons why people don’t have a Will:  Don’t want to think about dying; Fear of cost; Not sure whom to name as beneficiaries or personal representative. The most common reason I hear is, “I just haven’t gotten around to it yet.”

Although it is decidedly unpleasant to think about our own death, a Will is one of the most important documents any person will ever sign in their lives. Think about that for a minute. Your Will determines who will take ownership of your home, your car, your bank accounts—every possession you have acquired in your life. And more importantly, it dictates who will become the guardian of your minor children if you and your spouse should pass away.

Today I will not get into the technical details of the law. Instead, I will share examples from actual clients who passed away without their Will and estate plan in place.

 

Won’t the Law Automatically Leave Assets to My Family When I Die?  When you pass away without a will, your estate must generally go through intestate probate. Intestate means “without a last will and testament”.  There was a local man who came with his wife from the Philippines, had three children, and bought a home here in Hawaii.  After his wife passed away, he moved back to the Philippines, and in his 90s he remarried a (much) younger woman—younger than his children.  He had life insurance and savings that he wanted to leave to his new wife, but she had never been to Hawaii and he wanted to leave his Hawaii home to his three children in Hawaii from his prior marriage.  After he passed away without a Will, his new wife received the financial accounts and life insurance proceeds—as she was the named beneficiary.  At first she agreed to let the three children of her deceased husband have the Hawaii house, but then she changed her mind and decided to pursue every claim she can under the law. The new wife is entitled to $100,000 plus half the remaining estate under the intestate distribution laws.  These children who thought they were going to inherit their father’s home got a surprise when they found out that they would be sharing it with their father’s new wife in the Philippines, who could possibly force the sale of the house to cash out her share.

As if that’s not bad enough, the new wife is also going after land in the Philippines that had belonged to the three children’s mother, which she had inherited from her side of the family!  When their mother passed away without a Will, their father never probated mother’s estate, even though he was entitled to inherit all of mother’s land. Now that the father has died, his estate is entitled to the claim on his first wife’s property, and his new wife will get a piece of that land as well! I can imagine that was not at all what mother had intended to happen with her family land.

In another case, a client took care of his aunt and uncle who came from Hong Kong many years ago. The aunt was his blood relative, and the uncle was related by being married to his aunt. Aunt and uncle had no children, but they owned a condominium in Honolulu. Aunt passed away, and nephew took care of his uncle who had no other relatives in the US for many years after that. Uncle wanted to leave the condo to his kind nephew, but never wrote a Will. When uncle passed away, nephew stepped in to serve as the personal representative to help deal with the estate—but he will not inherit anything because he isn’t related by blood. Uncle had quite a few siblings, all in Hong Kong, and all of whom passed away before him. He had many grandnieces and grandnephews from those siblings, some of whom had also passed away. There are 25 heirs to uncle’s estate, none of whom he had ever even met. They are living all over the world and many of them could not be tracked down. The poor nephew is stuck in limbo as this case drags on, unable to find all the heirs, and not inheriting a penny from the estate despite all of his efforts and the help he’s providing.

These are some of the worst examples we’ve had recently, but you don’t have to be from a foreign country or have relatives living abroad for this type of problem to come up. There’s also a family who got into a terrible accident and the parents both died leaving behind children in their teens and early twenties. Although the children were mostly grown up at this point and didn’t need a guardian for very long, they still needed help with managing the finances even after they were old enough to legally take control at age 18. We’ve seen guardians and trustees take advantage of the situation to benefit themselves—in some cases more than they benefit the minor child whom they’re supposed to be using the money for!

For these and many other reasons, if you are over 18 and don’t have a Will or if you haven’t updated it in many years, please make it a priority to do it this year. We always think that there is more time, that we can do it next year, that we’ll never die…and then, as these families saw, it’s too late. Gain the peace of mind of knowing that you’re prepared early for something that will definitely come someday.

 

 

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