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Recently, a client came to me with the following story. A relative of his died without a Will. A search firm found my client and told him that he was a 75% heir of the relative and would receive 75% of his estate, after expenses, if he signed an agreement with them to locate all heirs and do all of the work necessary to collect the assets, pay taxes, and probate the relative’s affairs with the local probate court. To most people, including my client, this is like winning the lottery. Who would not want to be told that a rich relative died leaving them an unexpected windfall?
But, let’s consider what is really happening. The relative dies without a Will. His assets are going to the persons designated in his state’s laws for “intestate succession”. Many times that includes distant relatives who are unknown to the decedent. Also, it means that there will be significant costs to locate their distant relatives, prove the relationship to the decedent, and probate the estate. In this case, it will take almost 2 years to go through the process, so that it will end up being almost 3 years after the relative died before my client receives his or her share.
Moreover, there are expenses. There are probate fees, lawyer fees, appraiser fees and court costs. In this case, those fees will be in excess of 5% of the value of the estate. Then, because a search firm is involved, their fee is 25% of the amount that my client will receive. For example, if my client is suppose to receive $100,000, then he will only receive about $70,000, because $25,000 will go to the search firm and $5,000 will be spent on administrative expenses. The truth is, in my client’s case, the total estate may be worth as much as $3,000,000. Therefore, almost $900,000 will be spent on various fees before the relatives (including my client) get any money. I am sure that this is not what anyone wants.
If the relative had done the simplest of Wills, just deciding who was going to receive his assets, much of these fees and costs could have been avoided. And, most importantly, his assets would be going to the persons and causes he wanted, not what the state decided.
Unfortunately, this happens all too frequently. If you have not done a Will or estate planning, I urge you to do so immediately. It does not matter if you are 25 or 95. It is important for anyone who has any assets. In a perfect world, you wouldn’t have to spend money on a lawyer to do a Will and other estate planning documents, comprehensively and correctly. But no one wants 30% of their assets to go for expenses, with the rest going to strangers, if something unexpected happens. It is much wiser to invest in an attorney today in order to spare your assets in the future.
- Gary Altman, Esq.