Our "Why"

When someone dies there is often a sense of expectation from the loved ones left behind. Whether the person had amassed great wealth or not, those closest to that person are left with winding down the affairs and distributing whatever assets are left to individuals entitled to receive it. It is the sense of entitlement that is difficult to reconcile. Those who are entitled are not always those to whom the decedent would have left their assets. The following cases are illustrative of this.

Case 1

A woman in Baltimore dies without a Will. At the time of her death, she was the sole owner of her home, having survived her husband. The home was encumbered by an outstanding mortgage, and she was behind in her payments to the mortgage company.

The woman was survived by four adult children and an estranged husband. The four children were a result of her first marriage. She had purchased the home with her first husband who had died years before her. The woman married the second husband roughly six years before her death. The new husband became estranged within three years of the marriage.

After the woman's death, neither the estranged husband nor any of her adult children stepped up to administer her estate. Under Maryland law, a creditor may appoint a personal representative of a person's estate. Because the mortgage was delinquent, the mortgage company placed the property with a foreclosure law firm to foreclose on the woman's home. The mortgage company hired me to administer the borrower's estate.

Result: I sold the home to satisfy the mortgage debt. After paying off the mortgage, administration fees, and attorney fees, the remaining proceeds were paid to the husband. Even though the husband was estranged and had essentially abandoned his wife prior to her death, because there had been no plan to conserve the assets of the estate, there was insufficient assets available to allow the children to benefit from their mother's labor. I suspect the woman would have preferred that her children receive some benefit.

In this example, the value of the estate was greatly reduced by creditor's claims and administrative costs. The loss may not have been so great had the woman created a financial and estate plan. Moreover, effective planning would have allowed her to avoid distribution to her estranged husband.

Case 2

Even More Egregious than Assets Going to An Estranged Husband Is a Result that Allows Complete Strangers to Inherit and Benefit from Parents Lifetime Work to The Exclusion of Their Children as Illustrated in Case 2.

Sisters came to me to administer the estate of their late "stepmother". As it were, the stepmother had been married to the sisters' father for many years. However, the sisters were adult children at the time the father married the stepmother so they were not officially stepchildren as such, they were simply the adult daughters of their father's wife.

The house in which the decedent lived until death was the family home of the sisters. Their parents bought the house and raised the girls in that house. When the mother died, the father owned the house alone for many years. When the father remarried the sisters were adults living on their own. The father added his new wife to the title. The new wife embraced the sisters and they became a family. After the father died the sisters took care of the wife as well as the home. Whenever major repairs were needed around the house the wife reached out to the sisters and they would pay for the repairs. When the wife became ill, the sisters took care of the wife. The wife represented that she had no family outside of one distant cousin. Indeed, during the years in which the sisters cared for the wife, there was no contact with any relatives except for an occasional call from one distant cousin. So when the wife died without a Will the sisters believed that they could administer her estate as her stepdaughters. They assumed that the family home that they had been taking care of for years after their father died properly belonged to them.

Result: Sadly, the distant cousin had other ideas. The son of the distant relative petitioned the court as the next of kin for the wife. In fact, the wife was survived by many distant relatives. Because the house was titled in the wife's name the wife's distant relatives were her next of kind and so they were entitled to inherit the property. The sisters were not related to the wife and were not entitled to inherit. As a result, the sisters lost their family's home to complete strangers. I am certain that neither the father nor the "stepmother" would have wanted this outcome.

The loss of control suffered by the decedents in these two sample cases is why I believe in planning. I think everyone deserves to determine who benefits from their life's work when they are gone. If you don't have a plan the State has a plan for you and that plan may not reflect your wishes.