Succession By: Amber B. Woodland, Esquire
Raise your hand if you’ve binge-watched a series on your favorite streaming service over the last 2 years? I have, and I would bet that most of us are guilty. There’s just something meditative about retreating to the mindlessness of good television. When you find an entertaining series, it’s like you’ve struck gold.
This happened to me when I clicked over to “Succession” on HBO Max. In this series, leader of his business and his family, Logan Roy, contemplates who’s best fit to take over the highly dysfunctional family dynasty. Is it his son who’s always worked in the business or his daughter who has her own political agenda? How will he provide for his wife, who is the stepmother of his children, without creating conflict and resentment? What if Roy becomes incapacitated and is unable to make decisions related to his personal and business affairs? Ultimately, what will happen at his death if he doesn’t have a well-laid-out succession plan?
In a world full of distractions and in moments of extreme pressure and stress, it is easy to put off creating a thorough end-of-life plan. There will always be more enjoyable or seemingly important things to do. However, when you fail to plan you are accepting that default state laws will direct and control the administration of your estate upon your death. Often, these “intestacy” laws are not consistent with your intentions and relying on them can lead to unnecessary burdens, costs, and conflicts.
A person who dies “intestate” is one who dies without a valid Will. Every state has its own set of “intestacy” laws that are relied upon when a decedent dies without a thorough, written estate plan. At first blush, you may think this means you don’t have to bother creating an estate plan yourself because the default laws will just kick in. However, what’s important to realize is that intestacy laws rarely do exactly what you want, or even need, them to do.
Let’s start by reviewing how the intestacy laws determine who will be appointed to represent your estate. In Delaware, for instance, anyone (i.e. your friend, disgruntled neighbor, former colleague, or even a stranger) can be appointed as the personal representative if no one steps up within 60 days from your date of death. During the first 60 days, your spouse, then your children, followed by your parents, and then your siblings, in that order of priority, are entitled to be appointed. Imagine the complexities involved if your surviving spouse is unable to serve due to incapacity or if you have more than one child who wishes to serve. Extra paperwork is needed resulting in delays and potential conflict.
The intestacy laws then direct what the appointed personal representative has authority to do without further instruction from the Court. This includes many logical things, like gathering the decedent’s assets, filing tax returns, paying bills, and making distributions, but it doesn’t include authority to sell the decedent’s real estate, for instance. This type of authority is especially important in situations when real estate needs to be sold to pay debts. Creating a written plan that includes authority to sell usually eliminates the need for Court involvement, which ultimately saves time and money.
Finally, the intestacy laws control who will receive the remaining estate assets. This is known as “intestate succession.” If the decedent is survived by a spouse, then the share of the spouse is calculated first, but is reduced if the decedent is also survived by children (or parents). It gets even more complicated in blended family situations when the surviving spouse is not the biological parent of the decedent’s children. On top of that, stepchildren are never included. Neither are charities.
The intestacy laws fail to address the disposal of tangible property, too. In my experience, disposing of the jewelry, vehicles, collectibles, and heirlooms is the most emotionally charged and can create a lot of tension among family members. When the law is silent on how to handle these items, what happens? Often, they are sold so that the net proceeds can be easily distributed. If this is inconsistent with your wishes, creating at least a simple Will that addresses the disposition of your tangible personal property is imperative. Taking this step can also prevent a lot of drama, too.
Speaking of drama, before you dig into your next binge-worthy series on Netflix, consider sitting down with an experienced estate planning attorney to review your goals, discuss your wishes, and create an estate plan that you’re in control of, not the state. Otherwise, the intestacy laws will be the star of the show and that’s probably not how you or your family want your story to end.