Admittedly, I am a bit controlling, professionally pessimistic and I would like to say, thoughtful. Therefore, when I see bad things happening to good people, I am bothered. I often say that as an attorney I am biased by my experiences. Very few people call an attorney at the billable rate to say they are having a great day. More often than not the call is made to problem solve, to fix a problem or frustration. Subsequently, I am always anticipating the devastation of poor decisions, often compelled by grief or greed.
As an estate planning attorney, I have the great delight to work with individuals and families to create strategies to build intergenerational legacies. Often, we think about how to support children to have a plan to advance socio-economically with the tools that protect and guide.
Yet, every now and then people ask me the simple question, “what happens if I don’t plan?” The government puts safeguards in place that will pass things on or to protect the vulnerable. I often hear the response that “the state (commonwealth or district) will take your assets.” The answer to this question is, indeed, “it depends.” (That is the answer to almost every question from an attorney.)
There are circumstances when the government will be able to receive your assets. Here are a few of the circumstances:
- If taxes are owed, the government can put a lien on your estate to recover the assets.
- If the person who passes away received Medicaid benefits, the government is required to seek to recover the amount of benefits received through placing a lien on the estate, often property.
- If someone passes away and the estate has to go through the probate process. There are court costs involved. The court costs are dependent upon the amount of assets that the person who passed away has. Therefore, the more that is left the more the government receives.
A lawyer once said to me that because she was not married and only had one child the law of intestacy, the law that applies when you don’t have a will would have the same impact if she planned or didn’t plan. Therefore, why bother? (This is a great example of why you should only ask questions of lawyers who have knowledge in the practice area that is most relevant.) In this situation, the only heir will be the child. Yet, there are quite a few obstacles before there will be distributions to the heir.
I support people to think about how to avoid probate when they have passed away to avoid court involvement, minimize expenses, taxes and fees and maintain privacy and as much control as possible. The courts are committed to orderly transfer of assets. The processes and procedures that are in place are there to protect those left behind. Yet, the procedures require significant court involvement.
If you do not take the steps necessary to plan for incapacity the court will provide direction. You are incapacitated when you cannot make decisions for yourself. We want to always be able to make decisions for ourselves. Yet, if we are not able and we have not made any necessary steps to appoint someone to make decisions for us, the court will have to intervene to appoint someone to act on our behalf. The person appointed may be a loved one who fits the qualifications or a professional who is paid to represent your interests. If you haven’t taken the steps to appoint someone, then you will receive whoever the court has appointed.
As you can see, there are steps and procedures in place to facilitate the process necessary to achieve what must happen. The government wants to make sure that there is support for vulnerable people as well as a system to transfer assets from the person who has passed away to the next generation. But that way may not be the way that serves you best.
The choice is yours. You can take actions to achieve the best results for you and your loved ones or you can allow whatever happens to happen. We are able and willing to serve you and your family to create, protect and transfer your wealth to build a legacy.