By Attorney Suzanne R. Sayward (December 2011)
In September, this column discussed a new law going into effect this year that will affect the way estates are administered in Massachusetts. This law, the Massachusetts Uniform Probate Code (MUPC), also changes how assets are distributed to family members and who will be in charge of settling an estate when someone dies without a Will.
Here are five ways the MUPC may affect how your estate is distributed at your death.
1. “Per capita” versus “right of representation.” Under prior law in Massachusetts, if someone died without a Will, his estate was distributed to his descendants by “right of representation.” For example, say that Harry had five children. Harry dies without a Will and with no surviving spouse. Two of his children, Sam and Diane, predecease Harry. Sam had one child and Diane had three children. When Harry’s estate is distributed by “right of representation,” Sam’s only child would receive Sam’s one-fifth share of Harry’s estate. Diane’s three children would share Diane’s one-fifth share of Harry’s estate, and Harry’s other three living children would each receive a one-fifth share.
Under the new MUPC, the distribution would be made on a “per capita” basis. That means the shares of Sam and Diane will be added together and the two-fifths share that they would have received will be divided equally among their four children.
2. Amount receivable by a surviving spouse changes. Under the prior law, if someone died without a Will leaving both a surviving spouse and surviving children, the surviving spouse would receive half of the estate and the surviving children would receive the other half. Under the new MUPC, if all of the children are the children of the decedent and the surviving spouse, the entire estate will pass to the surviving spouse. For example, if Harry and Wilma have two children together and Harry dies without a Will, Harry’s estate will pass entirely to Wilma. The two children will not be entitled to any share of Harry’s estate.
However, if either Harry or Wilma has children from a prior marriage or relationship, then under the new law, part of Harry’s estate will pass to Wilma and part of his estate will pass to his children.
3. The new law favors certain individuals as personal representatives. Under the MUPC, the person who administers the estate of a deceased person is called a “personal representative”. Under the previous law this person was called an executor (if a person died with a Will) or an administrator (if a person died without a Will). The new law introduces the concept of priority of appointment of the person who will administer the estate in the event a person dies without a Will. Under the new law, the spouse has the first priority. If there is no surviving spouse, then all of the surviving children have equal priority.
So, if Harry dies with no surviving spouse leaving seven children, all seven of those children are entitled to be appointed as the co-personal representatives of the estate. Any one or more of the seven children could decline to serve and agree that the remaining sibling or siblings could serve in their place. However, if any one of those seven children is not agreeable to the arrangement the estate will have to proceed with a formal administration.
4. The new law permits a personal representative to name a replacement. Continuing with the example of Harry and his seven children, the new law would allow any one of those seven children to decline to serve as personal representative and to name someone else to serve in his or her place. The replacement person could be a spouse, other relative or friend. The new law recognizes that this could create a very contentious situation and provides that all of the other children must agree to the substitute appointment. Again, if there is not 100 percent agreement, the family will need to proceed with a formal administration through the probate court.
5. Divorce affects all beneficiary designations. Under the prior law, a change in marital status revoked the provisions favoring the ex-spouse in a prior Will. However, divorce had no affect on beneficiary designations for life insurance or IRAs, for example. Under the new law, divorce will not only revoke the provisions in favor of an ex-spouse and any member of the ex-spouse’s family in a prior Will, it will also nullify all previous beneficiary designations that favor the ex-spouse and any of his or her family members.
This makes sense in many instances. It is not uncommon for divorcing couples to forget to change beneficiary designations on life insurance or other pay-on-death type assets even though they remember to change their Wills. The new law will do this automatically. However, this may not always be the intent, especially as it relates to family members of an ex-spouse.
For example, if Dan and Michelle name Michelle’s sister as the guardian of their minor children in Wills made prior to their divorce, their subsequent divorce would revoke that guardian provision in Dan’s Will. Even though Dan and Michelle are divorced from each other, both may still be in favor of naming Michelle’s sister as the guardian of their minor children.
The substantive changes made by the MUPC in many ways represent what most people would want to have happen. However, that is certainly not the case for everyone. As has always been the case under the old law and will continue to be the case under the new law, it is important to be proactive and create your own estate plan so that you are in control of how your estate will be distributed and who will be in charge — instead of allowing the Commonwealth of Massachusetts to dictate those terms.
Attorney Suzanne Sayward is a partner with the Dedham law firm Samuel, Sayward & Baler LLC and served as the 2009 president of the Massachusetts Chapter of the National Academy of Elder Law Attorneys (MassNAELA). She was recently named MassNAELA’s Chapter Member of the Year for 2011. For more information, visit www.ssbllc.com or call (781) 461-1020.