In order to prepare for the unexpected, married individuals who have children (especially minor children) and more than $50,000 in testamentary assets (i.e. those assets which you one alone own and have no provision for inheritance attached to them) should have a Last Will and Testament, regardless of age or health condition.
When an individual dies without a Last Will and Testament, New York State’s intestacy statute determines specifically how an individual’s assets are to be distributed. The only way to deviate from the statute’s directive is to have a validly executed Last Will and Testament.
This is especially important for married individuals with children and more than $50,000 in testamentary assets. New York’s intestacy statute provides that under such circumstances, the deceased’s assets are to be divided as follows:
1) the first $50,000 to the surviving spouse;
2) then, ½ of the remainder to the surviving spouse; and
3) ½ of the remainder to the deceased’s children.
A simple hypothetical will reveal how problematic this can be. Take for example, a married individual with 2 children. That individual dies, without a Last Will and Testament and $250,000 in testamentary assets. The first $50,000 is distributed to the surviving spouse. The spouse then receives an additional $100,000 distribution (1/2 of the remaining $200,000). The final $100,000 is distributed to each of the 2 children equally.
In this all too common scenario, the surviving spouse, is left with only 60% of the testamentary assets, when in reality 100% is needed to support the surviving spouse for the remainder of his or her life. If the children are minors it is even more problematic. In that scenario, the $100,000 distribution to the minor children must be placed in a custodial account, which carries restrictions on the ability of the surviving spouse to withdraw the funds. For example, all withdrawals would need to be documented and specifically tied to a benefit derived by the child.
A Last Will and Testament is not a one-size fits all legal document. Prudent individuals should consult with an experienced estate planning attorney to specifically tailor a Last Will and Testament – and an overall estate plan – to the individual’s personal and family needs.