By Robert E. Fravel Jr., Esq.
Planning for your own death is typically not a priority on one’s everyday “to-do” list. For a lot of people, just thinking about their own death is uncomfortable and as a result many never get around to having a Last Will and Testament drafted. This is a mistake!
If you are reading this and saying to yourself, “If I am already dead, why would I care what happens to my property?” Let me explain. Having a Will drafted according to your wishes gives you the ability to determine who (or what) will receive an inheritance, what type of inheritance they will receive or how much of an inheritance they will receive, when they will receive that inheritance (in some circumstances), and who will be responsible for distributing your property. And the best part is, if done correctly, nobody can say otherwise! That is some serious authority! However, if you die without a valid Will in place (the legal lingo for dying without a Will is “dying intestate”), the state government will step in and the state’s intestacy laws will determine who will receive an inheritance and how much they will receive. This can and often does, create a multitude of problems, particularly among family members of the deceased (believe me, I have seen it happen). Here is an example of a fairly basic estate and some of the common problems associated with dying without a Will:
Dave, a lifelong Pennsylvania resident, dies without a Will. Dave has no living spouse but he does have three adult children – Kelly, Anna and Mike. Dave also left behind his lifelong best friend, Tom. At the time of his death, Dave owned the following assets: a 4 bedroom house in Harrisburg valued at $325,000, an old single room fishing cabin on Lake Wallenpaupack which Kelly’s realtor friend valued at $100,000, a dilapidated 1963 Ford Thunderbird valued at $2,000, one checking account with a death balance of $20,000, two savings accounts each with a death balance of $75,000, and various personal items with no real monetary value. The estimated value of Dave’s estate is approximately $597,000.
Kelly was very close with her father and the two of them spent countless weekends fishing at the Lake Wallenpaupack cabin. Regardless of how busy she was, Kelly always made it a priority to see her father at least once a week. Anna was also very close with her father but 15 years ago her career forced her to move to Erie, Pennsylvania and she has only visited her father twice since she moved. Anna’s fondest memories of her father were the annual trips to the Wellsboro Car Show the two of them made in her father’s prized 1963 Thunderbird. Mike is the youngest and has a gambling addiction. Mike left home at the age of 16. Mike has not spoken to his father or anyone else in his family since he left home, but he still resides in Pennsylvania. Tom had been Dave’s best friend since they were children. They grew up together, went to school together and even fought in a war together. Dave valued Tom’s friendship very much and frequently expressed this to Kelly and Anna. Tom personally cared for Dave from 2009 up until his death and did everything in his power to make sure her Dave was comfortable during his final years.
In this situation, the Pennsylvania intestacy laws require Dave’s estate to be divided into three equal shares – one for each of his children. Tom will receive nothing from Dave’s estate. In this scenario, each child is entitled to approximately $190,000 (597,000 – 4.5% [inheritance tax rate for direct descendants] / 3). This seems like a fairly simple solution at first glance, but when the estate contains assets that are not liquid (like real estate and automobiles), and/or assets that have some sentimental value to certain beneficiaries, the situation becomes delicate. If none of the children want the non-liquid assets (Harrisburg house, lake cabin and 1963 Thunderbird), those non-liquid assets will be sold, the proceeds will be combined with the remaining liquid assets (checking and savings accounts) and the entire estate amount will be distributed in three equal shares. But it is never that simple.
After Dave’s death, all of the children felt as if they should be in charge of their father’s affairs and thus they could not agree on one person to be the Administrator of the estate (this is the person in charge of distributing the estate assets when there is no Will naming an Executor or Executrix). Tom desperately wanted to help in the affairs of Dave’s estate, he felt it was his last chance to pay his final respects to his beloved friend, but since he was not a beneficiary according to Pennsylvania’s intestate laws he was unable to participate. As a result, all three children became Co-Administrators and any estate distribution/decision must be approved by at least two of the three children.
In the above scenario, suppose Kelly wants the lake cabin because it holds a special place in her heart due to all of her fond memories fishing at the cabin with her father. Mike only wants money. He wants as much money as possible (to fuel his gambling addiction) and convinces Anna that the lake cabin is actually worth $150,000 instead of $100,000. Anna and Mike can force the sale of the lake cabin without the consent of Kelly, and Kelly will be forced to either purchase the cabin from her father’s estate for whatever price Mike and Anna deem acceptable or accept one-third of the proceeds from the sale of the lake cabin to a third party. Depending on how badly Kelly wants the lake cabin, Mike and Anna can strong-arm her into paying a much higher price or completely prevent her from inheriting the lake cabin. If Mike and Anna decide for some reason, that they simply do not want Kelly to have the cabin, they can refuse to sign the real estate Agreement of Sale or back out at the closing table, even if Kelly is willing to pay the asking price. It is not difficult to imagine the amount of animosity that will be created between Kelly and her other two siblings if this happened. This animosity would likely carry on throughout the remaining estate distribution period and possibly long thereafter.
Suppose a few weeks later Anna tells her two siblings that she wants the 1963 Thunderbird because it holds a great deal of sentimental value to her due to the long road trips Anna and her father shared in the Thunderbird. As usual, Mike is only concerned with money and thinks that despite its current condition, the car is worth more than $2,000 because he claims “it’s a classic, all classic cars are worth at least $10,000”. Kelly then becomes the deciding vote. She can either agree to give the car to Anna as a “distribution in kind” with an alloted value of $2,000, or she can decide to side with Mike and sell the car to the highest bidder. Even if Kelly knows that the Thunderbird is not worth more than $2,000, she may very well decide to authorize the sale out of spite, given how Anna treated the situation surrounding the lake cabin (yes this does happen, family members often become extremely spiteful in these types of situations).
To add further tension, Kelly and Anna might feel as though Mike should not receive anything from their father’s estate because Mike has had no relationship with their father since he was 16. Or Kelly might feel as though she deserves a larger share of the estate since she was the only one who maintained a constant relationship with her father over the years. As you can see, emotions and feelings often play a large role in how smooth and efficient intestacy matters proceed.
The above scenario only highlights a fraction of the possible problems associated with dying intestate, but the majority of these problems could have been avoided if Dave simply had a valid Last Will and Testament. Dave would have had the final authority on each child’s inheritance. The children would have no power to impede each other’s inheritance. If Dave wanted Kelly to have the lake cabin, he could have devised that property to her in his Will and neither Anna nor Mike would have been able to second guess that decision, regardless of whether they thought it was worth more than $100,000. The same goes for Anna and the Thunderbird. On the flip side of the coin, if Dave never intended to leave any of his estate to Mike due to their non-existent relationship, he could have expressed that wish in his Will, and Mike would not receive a penny. Additionally, if Dave wanted to reward Tom for his devoted friendship, he could have done so through his Will. But since Dave did not have a Will when he died, none of this is possible.
It is always a very emotional time whenever a friend or family member passes away, and when these emotions are combined with money – stress, tension and animosity are almost certain by-products. Having a valid Last Will and Testament will not help ease the pain of those who lost a loved one, but it can go a long way to alleviate some of that stress, tension and animosity. We all work hard to acquire our assets over the course of our life, and we all deserve the right to pass on those assets to whomever we see fit. Don’t leave this final decision to someone else.
Robert E. Fravel Jr. is a Pennsylvania attorney at Timby Hunt law firm in Doylestown, Bucks County. If you would like to further consult with Mr. Fravel send him an email at ref@timbyhunt.com or call him at (215) 230-7626.
Timby Hunt, LLC 