If a client dies without leaving a Will or Trust or other instructions regarding their assets, the assets pass via intestacy. Intestacy, essentially, is the default Will for each person dying a resident of that particular state. Every state has such a default Will for its residents.
The default Will that is provided by intestacy varies slightly from state to state. However, they typically provide for the spouse and children in some percentages. If those people do not exist, then assets go to the decedent’s family of origin, typically. At the end of the line, the state has put in an heir of last resort. Therefore, if there are no living relatives of the specified degree, there is always somebody standing there to take. Guess who states have chosen for the role of heir of last resort? Themselves. That’s right, the state of residence is the heir of last resort. The assets “escheat” to the state.
You may think this never happens. Or that it last happened in 1865, right after the Civil War. But, that’s not the case. It even happens nowadays. Roman Blum recently died a resident of New York. Lucky New York! Blum left no Will. Blum also left no spouse, descendants, or relatives. Blum was a holocaust survivor who was childless and whose wife predeceased him by more than a decade. Thus, his entire estate of $40 million will go to the Empire State. Here is a recent article in Forbes about the situation and an article in the New York Times about Blum.
Of course, if you can prove you are related to Mr. Blum, then you would inherit and the estate would not escheat to New York. You better start looking back at that family tree!
Stephen C. Hartnett, J.D., LL.M.
Associate Director of Education
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (800) 846-1555