Sometimes when you spend all day, every day dealing with the complications of a particular area of law, the simplest question can surprise you. People ask me, on a fairly regular basis, whether they really need a living trust, or a power of attorney, or a transfer-on-death deed, or some other specific item.
But once in a while, people ask me if they actually need a will.
The person who asks that question might think they don’t have enough money to need one. Perhaps they assume that if they don’t have a will, the money simply goes to their spouse or their children. Or maybe they have made arrangements to avoid probate and think that will be sufficient.
Spoiler alert: Everybody needs a will.
I’m going to give you a few stories here. These are real-life cases, although the names (and a few other details) have been changed to protect the innocent. Chances are none of these will be exactly your situation, but I am hoping it will give you an idea of the kinds of things that can come up.
Example 1: Margery, an elderly widow with no children, didn’t have a lot of assets. She had some furniture, a couple pieces of jewelry, and a few personal items. She lived on Social Security and a small pension, in a rented apartment. She figured that a will was unnecessary, as there wasn’t enough for anyone to fight over.
Then one day, as Margery was walking home from the bus stop, a van belonging to a local company rounded a corner too fast, slid on the ice, jumped onto the sidewalk and seriously injured Margery. The insurance company paid out $500,000 to Margery, who died soon afterward.
Since she didn’t have a will, Margery’s estate will be divided according to a set of laws called the “intestate statutes.” If the word “intestate” is unfamiliar to you, understand that it is from the same root word as testament, as in “last will and testament.” If someone is intestate, that is the opposite of having a last will and testament. If you die intestate, a very inflexible set of laws says who gets your money.
In Margery’s case, since she died without a surviving spouse or children, and since her parents had also already died, the intestate statutes require that the money go to her nearest relatives, which is her brother and sister. So whatever is left after her creditors (not to mention the lawyers and accountants) have gotten their fill, will go to her siblings. Margery hadn’t seen her brother in over 50 years, and her sister is in a nursing home and will have to give up the money to Medicaid.
She didn’t think she had much money, but her estate sure did.
Example 2: Bob and Diana built up a decent-sized estate during their long marriage. They were planning on getting around to doing their estate planning at some point, but they both seemed healthy and there were other priorities. And then one day Bob unexpectedly had a massive stroke, dying after a few weeks in the hospital.
Diana assumed that, as the surviving spouse, she would receive the entire estate. They had a lot of rental properties, but since Bob was the one who handled all of that, those properties were only in Bob’s name. So were a lot of the investment accounts that were funded by the profits.
And everything might have gone to Diana, except for one thing. Bob and Diana had a teenage son, Ronny. There was also a daughter named Andrea, but Diana had Andrea before she met Bob, and even though he raised Andrea and treated her as his own, he never formally adopted her.
Under the intestate statutes, the first $205,000 from Bob’s estate will go to Diana as the surviving spouse. But because Diana has a child who is not also Bob’s child, half of the remainder will go to Ronny. At this point he is planning to rent an entire floor of a hotel for his 18th birthday bash. Par-tay!
Example 3: David and Betty never had children, they just had each other. As an interracial couple from the South, they had been disowned by their respective families, and moved to Alaska. They lived here happily for many years, until Betty succumbed to a brain tumor.
Betty worked for the same employer for many years and had a lot of money saved up in her 401(k). David thought he was listed as the beneficiary, but somehow the paperwork had never been filed, and the 401(k) had to go through probate. David was shocked to learn that because Betty’s mother is still alive, he gets the first $255,000 from the 401(k), but he will have to give one-fourth of the rest of it to his mother-in-law -- a woman he has not seen in 30 years, who cussed him out and used a racial slur the last time he saw her, and who would not even attend her daughter’s funeral.
I could give more examples — perhaps in a future column I will — but do you get the point? Don’t rely on the intestate statutes. Everybody needs a will.
Kenneth Kirk is an Anchorage estate planning lawyer. Nothing in this article should be taken as legal advice for a specific situation; for specific advice you should consult a professional who can take all the facts into account. And yes, you really need to do that.
