by: Mark A. Krohn & Gary M. Schuster
Host: Hello and welcome to Upfront and Legal. On this edition, Mark Krohn and Gary Schuster discuss a matter most people would surely like to forget - making a last will. But as these attorneys of Jacobowitz & Gubits, Walden and Monticello, point out, that's probably not such a good idea for individuals and families. And what's at stake is often more than money or other assets. Entire family relationships are sometimes irreparably damaged simply because there was no will. To open the discussion, here's Gary Schuster:
GMS: Mark, I know you've spent a lot of your time writing wills for people. Why should somebody have a will?
MAK: Usually because they're concerned that the property they wish to leave to somebody actually reaches that person. And also the concern is that the person that they want to serve as their executor actually is named so that their certain...that the person they want to represent them after their death, is going to be there for them.
GMS: Well, let me as this another way: What happens if you don't have a will?
MAK: Well, if you don't have a will in New York - New York State actually provides a will for you. Under intestate law you have to take a look at the survivors and if the survivors are just children [no spouse] then the children would share in the estate equally.
GMS: What if there is a surviving spouse and children?
MAK: Then the property is shared between the surviving spouse and the children, so it would depend on how many children and so on, but in the event there is no will you can have some very devastating affects. For example, you'll end up having one child wanting the dining set and another child wanting to have the same set and then there's arguments and sometimes these kinds of things can be resolved and sometimes they can't. So, again, that's another good reason to have a will so that these disputes are settled within the will itself.
GMS: Did you ever experience a case where different children were perhaps fighting over who would be the administrator of an estate that didn't have a will?
MAK: Oh yeah. A lot of times a child will remember the father or the mother saying 'I want this to happen' and so they think they should be the administrator. The unfortunate thing is that these kinds of fights could have been easily avoided by simply drafting a will. It doesn't have to be a complicated will. It can be a very simple will and naming...it doesn't have to be just one child, as a matter of fact, Gary, I wanted to just mention that it can be more than one child. It can be two children serving as co-executors or even three. I think you want to stay away from more than three because then it becomes a little unyielding after a while.
GMS: What about...I believe the law says that where there is a spouse and surviving children, the spouse gets the first $50,000 in value and the children get half of the rest? [MAK: That's true] So if you don't like that scenario you want to write a will.
MAK: Wow. That's definitely the case. But a lot of times if you have a smaller family and they all get along you can always have a situation with some of the children may agree to waive their interest in favor of the surviving spouse, but that's not a guarantee.
GMS: Oh, so they can do that?
MAK: Oh, sure. They can renounce their interest...
GMS: ...and leave everything to Mom, for instance. [MAK: Exactly.] But they have to go through some steps. They have to sign papers, papers have to be written up, they have to be filed in court. [MAK: That's right.] So there's work to be done.
MAK: That's right. It's a little bit more complicated. All these complications could have been easily avoided by drafting a will which is only a couple pages long.
GMS: So suppose there is a fight between some of the children - to a brother and a sister fighting over who gets to administer the estate - who gets to decide that?
MAK: Well, if there is a fight then the usually the judge and a court will decide who is appointed as the actual administrator so that process takes time, it takes money. Again, something that could have easily been avoided by simply naming an executor in a will.
GMS: And what does the executor do, exactly?
MAK: Well, the executor is responsible for marshaling the assets of the decedent's estate, paying the remaining bills and then dividing the estate as the will sets forth...in the manner set forth in the will. Also responsible for determining whether the claims submitted against the estate are valid, protecting the assets while the estate is being administered, making sure there's insurance and investing the property prudently - conservatively - so that it has value. There's a lot of things an executor is charged with doing.
GMS: So if, for instance, there is a home - suppose the mother was living in the home and she finally dies, the executor would have to sell the home. What if a sibling decides they would rather buy the home?
MAK: Well, in that case scenario, usually what'll happen is the sibling will contact his or her other siblings and say 'Look, I'd really like this house. I'd like to buy your interest. Would you agree to sell it to me?'
GMS: And they have to agree on a price, of course.
MAK: Well, yeah, that's usually done by getting an appraiser out there to do three comps (comparisons), at least, and then determining what the fair value of the house is at the time of death and then the one child that wants to stay in the home will then pay the
interest that the other siblings have and it will be resolved that way. GMS: Suppose there are two children who want to live in the home?
MAK: That's a problem. Unless they get along well! [GMS: Unless they're roommates!] [both chuckling] Exactly right.
GMS: So they get into a bidding war? I assume now the other brothers and sisters want a fair price for that house. They don't want a sweetheart deal. They want to get full value for that house.
MAK: Well, let me tell you, Gary, there's as many different scenarios that can happen as there are people out there. I mean, I have seen children just say 'Look, I live out in California and I don't really have any interest in that house in New York. You guys can fight it out.' We have other scenarios where they will fight to the death, practically, in connection with getting what they want. And it's a shame. Again, all these kinds of problems could be easily avoided by simply having a will drawn.
GMS: It is my impression that when these fights take place it's very emotional. It's not like a couple of businessmen having a business dispute. People remember what happened when they were 8-years old and they can be very difficult disputes. You can't always settle them the way you might between two business men, so these fights can actually be quite lengthy and emotionally stressful.
MAK: Absolutely. I mean, you can have a family that is very close before a parent dies and then once the parents die, they end up fighting and not talking with one another for the rest of their lives which is, again, a very unfortunate situation.
GMS: So it's another reason to prepare a good will.
MAK: Absolutely. For example, recently I had a situation where we represented a lady and she couldn't make up her mind. We had drafted five different drafts of a will and she ended up dying without signing it, so of course the drafts were no good without her signature and the family and the children are very upset because Mom died without a will. There is a real potential here for conflict of interest because one child lives out of the state of New York and the other child lives in the state of New York and I believe the one child who lives in the state of New York has a real keen interest toward living in the home, but, as you just mentioned, the child outside the state of New York wants to be paid a fair value for his interest in the home. Of course! All these problems could have been resolved so easily if Mom could have just made up her mind with regard to how to handle the home and maybe perhaps she could have left other property to the child living outside the state of New York.
GMS: I had a very memorable experience where a woman was sick in the hospital and she had two daughters and rather late she decided she had to have a will and we very quickly drafted one. She was going to have heart surgery, so she was very sick, she very anxious and worried about her children. She had to execute this document. She was weak and it was a very difficult will signing and the children were off in the corner crying and at a
time that is already stressful enough - you're in the hospital going to have major surgery - then you also have to worry about a will, so basically she waited too long to do this will. She would have been much more relaxed had she done that months earlier.
If you decide you want a will, there's some work you need to do before you go see a lawyer which is to think about who you want to be your executor; parents who have young children need to think about who is going to take care of their children; you need to assemble your financial information; you need to see what your assets are, what your debts are, a sense of what your net estate is going to be; and write all this material down. What else do you need from people, Mark?
MAK: They need to understand their wishes are in the long term for their children. For example, if they want a testamentary trust established in their will to care for a child who may be developmentally disabled, we have to know that information as well. There are many different vehicles that we can use to protect or preserve assets, what we call 'from the grave', so that after a parent dies they can still rest assured that their assets are going to be used to protect their family's interest even though they maybe long gone.
GMS: We've been talking about old people and people who are in the hospital, but wills are not just for them. Obviously people get into accident and die from all sorts of causes at any age and - we don't like to think about it but in this business we do - parents are in car crashes together, they die together. So it is for younger people as well.
MAK: I think everyone who has a child, a young child under the age of 18, should have a will to have a guardian appointed in the event something happens to both parents. That's an example of a will that's really required for a younger person. After considering everything that must be considered whether to have a will or to not have a will, there are other elements, Gary, that we did not even touch such as a device known as a living will, health care proxy and a power of attorney. We should at some point in the future come back to the table and discuss these other documents as well.
GMS: That's the full package that people need to take care of their families.
MAK: The living will, the health care proxy, the power of attorney and the last will. Exactly. Host: Mark Krohn and Gary Schuster will return right after this commercial break. [silence]
Host: That's all the time we have for this presentation. If you have any questions about a will for yourself or someone in your family, you can call either Mark Krohn or Gary Schuster direct at 845-778-2121. Just tell the operator you listened to Upfront and Legal and you have a question for Mark or Gary. That's 845-778-2121. Thanks for listening!
