Forbes recently reported on a unique case that illustrates what happens when one fails to conduct any NY estate planning and does not have close heirs to take an inheritance via default intestacy rules.
The article explained how a man named Roman Blum died in January of this year. A former real estate developer, Mr. Blum was worth about $40 million at the time of his passing. He was 97. Remarkably, for one with such wealth, Blum did not have any estate planning conducted–no use of trusts or even a will to designate final wishes and property distribution.
When one dies without a will special rules apply which include a ranking list of possible inheritors. In New York, for example, an estate is usually split between a spouse and children (with a special $50,000 addition to the spouse). If there are no children, then everything goes to the spouse. If there is no surviving spouse, then everything goes to the children. If one has no spouse or children, then everything goes to parents, and absent living parents, siblings.
Importantly, these designations are made “by representation.” That means that heirs of the intended beneficiary can claim in the other’s name. For example, consider a man who dies intestate in New York. His spouse died first. He had two children, but one of them already passed away. He has four grandchildren, three from the child who is still alive, and one from the child who passed away. Under the law, the inheritance is split between his actual children–one alive and one deceased. Because it is divided “by representation,” the deceased child’s share will be given to that child’s own issue (the grandchild).
The important thing to remember is that these rules generally ensure that at least some heir is found to receive an inheritance following a death. However, sometimes no heirs can be found at all. That is what seems to have happened in Mr. Blum’s case. Officials have been searching for relatives to collect the $40 million but have thus far turned up nothing. If no one is found after three years, then in most cases the inheritance will go to the state government.
Of course, virtually no one, if given the choice, would simply give all of their assets to the government. Even if one does not have relatives or friends who they’d like to have funds, steps can be taken to give assets to a favorite charity or cause. All that it takes is simple visit to an estate planning lawyer to share wishes and get the details written up while following proper legal protocols.