A recent article in Forbes highlights one of the most important reasons why you need to create a last will and testament. In January of 2012, New York real estate developer Roman Blum died at the age of 97. He left behind an estate worth $40 million and, apparently, not a single living relative.
Because no relatives can be found and Mr. Bloom did not have a last will and testament stating how he wanted his property to be distributed after he died, it appears that the state of New York will inherit his entire fortune.
What a person dies without a last will and testament, state laws determine which family members inherit the deceased person’s property based on their relationship to the decedent. Essentially, close relatives stand to inherit first, while more distant relatives will inherit if no one closer survives the decedent. These laws are known as laws of intestate succession.
In Mr. Blum’s case, there are no apparent surviving relatives. Unless a surviving relative is found within three years of his death, the state of New York will inherit everything.
The reason the state of New York will inherit Mr. Blum’s fortune is because of the legal process called escheat. This is the final safety net that intestate succession laws apply to inheritance situations. Escheat laws say that if there are no living relatives, the state becomes the legal heir.
Of course, anyone can avoid the possibility of intestacy or escheat by simply creating a last will and testament or other estate planning tool.