In last week’s post I started talking about intestacy laws which direct how assets pass when a person dies without a will. This week I will discuss a couple of instances where failing to prepare a will proved harmful.
In the first case, Joe was married but he had no descendants. His mother however, was still alive. Because Joe had no will, under the intestacy laws his wife inherited most but not all of his estate. The law provided that Joe’s mother was entitled to a small percentage which amounted to about $50,000. The fact that his wife did not inherit everything did not pose a problem for her until she told m that her mother in law was in nursing home on Medicaid. Now Mom had a problem.
Joe’s mother had two choices. She could come terminate her Medicaid benefits, spend down the money and then reapply. Her second option, which her family chose, was to give the money to the State and remain on Medicaid since she would have owed the State that money anyway when she died under estate recovery laws. With a will, this result could have been avoided.
The second case involved a more complicated family tree. Jerry had two children with his second wife Nancy. He also had two children from his first marriage. Nancy had another two children from her first marriage. Because not all the descendants were the result of Jerry and Nancy’s relationship, as the surviving spouse, Nancy was only entitled to a part of Jerry’s estate because he died without a will.
Under New Jersey’s intestacy laws, Nancy received a little more than ½ of his probate estate. The rest was split amongst the Jerry’s four children. Nancy objected that this was not what Jerry would have wanted. She told me that he had a close relationship with her two children from her first marriage whom he viewed as his own but had been estranged for many years from the children of his first marriage. Nonetheless, it was the children from his first marriage who would receive a share.
It seemed unfair to her. I could only tell her that the law allows us to direct the distribution of our estate but if we fail to exercise that right the State dictates what happens which may or may not be what you want. In these two instances it clearly was not what Joe or Jerry wanted.