Heath Ledger was an Australian actor who was famous for starring in well-known films such as 10 Things I Hate About You (1999), The Patriot (2000), A Knight’s Tale (2001) and Brokeback Mountain (2005). He was particularly lauded for his performance as the Joker in Christopher Nolan’s The Dark Knight in 2008. However, his life was cut tragically short in January 2008 when he died at his apartment after an accidental overdose related to his abuse of prescribed medications. He accumulated a significant estate during his life from his earnings in film and television performances. Unfortunately, his death occurred before he could update his estate planning to provide for his daughter. Heath Ledger’s death is a cautionary tale for others to ensure that they update their estate plans after major life events.
In 2003, Mr. Ledger executed a Last Will and Testament that left 50% of his estate to his sisters, Olivia Ledger and Ashleigh Bell, with the remaining 50% of the estate to go to his parents Kim Ledger and Sally Bell. At the time he created his Will, Mr. Ledger was unmarried and had no children.
In 2005, Mr. Ledger had a daughter, Matilda, with his then-girlfriend Michelle Williams. However, Mr. Ledger did not update his estate plans to reflect his child and, when he passed away in 2008, the Last Will and Testament from 2003 was still in force. Fortunately for everyone involved, there were no challenges on behalf of Matilda against the estate because Mr. Ledger’s parents and sisters voluntarily gifted their share of the will to Matilda without contest. For Matilda, this turned out to be a fair result from her father’s family that understood what he wanted. For other families, this outcome could have been a bitterly contested issue in probate court.
Mr. Ledger’s estate was valued to be upwards to $20 million, with the vast majority of that being placed in trusts that were not required to be listed in court. However, despite Mr. Ledger’s initiative to create an estate plan in 2003 to manage his assets and state his wishes, he accidentally caused stress to his family when these plans were not updated timely. Mr. Ledger’s parents and sisters could have fought to keep what was bequeathed to them under the will despite Mr. Ledger having a daughter born after the fact.
This blog article will explore the legal consequences of failing to create estate plans and failing to update estate plans after a major life event.
WHAT HAPPENS IF YOU DIE WITHOUT A WILL OR TRUST?
A person who passes away and leaves assets behind without a will is said to have died intestate (as opposed to testate for someone who left a will behind). This means that who receives the decedent’s assets is determined by that state’s intestate succession laws. Every state has very different and distinct rules for who gets your assets after death, including Michigan.
Under Michigan’s intestate succession laws, if a decedent dies without a will and was married, the intestate share of the surviving spouse is as follows:
- “The entire intestate estate if no descendant or parent of the decedent survives the decedent.” MCL 700.2102(1)(a).
- “The first $150,000.00 ($253,000.00 in 2022*), plus 1/2 of any balance of the intestate estate, if all of the decedent’s surviving descendants are also descendants of the surviving spouse and there is no other descendant of the surviving spouse who survives the decedent.” MCL 700.2102(1)(b).
- “The first $150,000.00 ($253,000.00 in 2022*), plus 3/4 of any balance of the intestate estate, if no descendant of the decedent survives the decedent, but a parent of the decedent survives the decedent.” MCL 700.2102(1)(c).
- “The first $150,000.00 ($253,000.00 in 2022*), plus 1/2 of any balance of the intestate estate, if all of the decedent’s surviving descendants are also descendants of the surviving spouse and the surviving spouse has 1 or more surviving descendants who are not descendants of the decedent.” MCL 700.2102(1)(d).
- “The first $150,000.00 ($253,000.00 in 2022*), plus 1/2 of any balance of the intestate estate, if 1 or more, but not all, of the decedent’s surviving descendants are not descendants of the surviving spouse.” MCL 700.2102(1)(e).
- “The first $100,000.00 ($169,000.00 in 2022*), plus 1/2 of any balance of the intestate estate, if none of the decedent’s surviving descendants are descendants of the surviving spouse.” MCL 700.2102(1)(f).
*This amount may be adjusted by the Michigan Department of Treasury pursuant to MCL 700.2102(2).
“Any part of the intestate estate that does not pass to the decedent’s surviving spouse under section 2102, or the entire intestate estate if there is no surviving spouse, passes in the following order to the following individuals who survive the decedent”:
- “The decedent’s descendants by representation.” MCL 700.2103(a).
- “If there is no surviving descendant, the decedent’s parents equally if both survive or to the surviving parent.” MCL 700.2103(b).
- “If there is no surviving descendant or parent, the descendants of the decedent’s parents or of either of them by representation.” MCL 700.2103(c).
- “If there is no surviving descendant, parent, or descendant of a parent, but the decedent is survived by 1 or more grandparents or descendants of grandparents, 1/2 of the estate passes to the decedent’s paternal grandparents equally if both survive, or to the surviving paternal grandparent, or to the descendants of the decedent’s paternal grandparents or either of them if both are deceased, the descendants taking by representation; and the other 1/2 passes to the decedent’s maternal relatives in the same manner. If there is no surviving grandparent or descendant of a grandparent on either the paternal or the maternal side, the entire estate passes to the decedent’s relatives on the other side in the same manner as the 1/2.” MCL 700.2103(d).
“If there is no taker under the provisions of this article, the intestate estate passes to [the State of Michigan].” MCL 700.2105.
Ironically, if Mr. Ledger was a Michigan resident and died without any estate plans, his assets would have automatically passed onto his daughter Matilda anyway since he was unmarried. This would have been the operation of law whether Mr. Ledger intended for this or not. Other states have intestate laws that may require assets to be distributed in part to parents and siblings no matter what the marital status is. Intestate succession could have unintended and unwanted consequences.
WHAT HAPPENS IF YOU DO NOT UPDATE YOUR WILL OR TRUST TO REFLECT NEW SPOUSE AND CHILDREN?
If someone creates a Last Will and Testament leaving assets to relatives and friends, but marries and has children after the fact, then the family might find itself in a very awkward position regarding the wishes of the testator. However, Michigan provides that an omitted spouse and children may still be entitled to inherit or otherwise receive proceeds from the estate under the following statutes:
I. Spousal Election (MCL 700.2202)
The surviving spouse can make one of the following elections regarding the decedent spouse’s estate to the probate court:
- Abide by the terms of the last will and testament. MCL 700.2202(2)(a).
- Elective Statutory Share: Take ½ of the sum or share that would have passed to the spouse had the testator died intestate, reduced by ½ of the property derived by the spouse from the decedent by any means other than testate or intestate succession upon the decedent’s death. MCL 700.2202(2)(b).
The personal representative must notify the surviving spouse of the right to election within 28 days of his or her appointment. MCL 700.3705(5). The election must be made within 63 days after the presentment of claims or within 63 days after service of the inventory upon the surviving spouse, WHICHEVER IS LATER, but it must be exercised in the surviving spouse’s lifetime. MCL 700.2202(3). If a surviving spouse fails to make an election within the statutory time frame, then it is presumed that said surviving spouse elects to abide by the terms of the will. MCL 700.2203. “Filing of a petition to admit the will of a deceased spouse, failing to object or consenting to admission of the will to probate, or accepting appointment as a personal representative does not prevent a surviving spouse’s election to take against the will.” MCL 700.2204. The surviving spouse can waive the right to the spousal election in a written contract after fair disclosure (e.g. prenuptial agreement or antenuptial agreement). MCL 700.2205.
II. Omitted After-Born Children (MCL 700.2302(2)
Michigan’s Estate and Protected Individuals Code provides a process that allows that omitted child to inherit even when the will inadvertently leaves him or her out. According to MCL 700.2302(1), “if a testator fails to provide in his or her will for a child of the testator born or adopted after the execution of the will, the omitted after-born or after-adopted child receives a share in the estate as provided in 1 of the following:”
- “(a) If the testator had no child living when he or she executed the will, an omitted after-born or after-adopted child receives a share in the estate equal in value to that which the child would have received had the testator died intestate, unless the will devised all or substantially all of the estate to the other parent of the omitted child and that other parent survives the testator and is entitled to take under the will.”
- “(b) If the testator had 1 or more children living when he or she executed the will, and the will devised property or an interest in property to 1 or more of the then-living children, an omitted after-born or after-adopted child is entitled to share in the testator’s estate subject to all of the following:”
- “(i) The portion of the testator’s estate in which the omitted after-born or after-adopted child is entitled to share is limited to devises made to the testator’s then-living children under the will.”
- “(ii) The omitted after-born or after-adopted child is entitled to receive the share of the testator’s estate, as limited in subparagraph (i), that the child would have received had the testator included all omitted after-born and after-adopted children with the children to whom devises were made under the will and had given an equal share of the estate to each child.”
- “(iii) To the extent feasible, the interest granted an omitted after-born or after-adopted child under this section must be of the same character, whether equitable or legal, present or future, as that devised to the testator’s then-living children under the will.”
- “(iv) In satisfying a share provided by this subdivision, devises to the testator’s children who were living when the will was executed abate ratably. In abating the devises of the then-living children, the court shall preserve to the maximum extent possible the character of the testamentary plan adopted by the testator.”
However, according to MCL 700.2302(2), an omitted child CANNOT inherit if EITHER of the following are true:
- “(a) It appears from the will that the omission was intentional”, OR
- “(b) The testator provided for the omitted after-born or after-adopted child by transfer outside the will and the intent that the transfer be a substitute for a testamentary provision is shown by the testator’s statements or is reasonably inferred from the amount of the transfer or other evidence.”
III. Homestead Allowance (MCL 700.2402)
The surviving spouse is entitled to a homestead allowance of $15,000.00 (adjusted to $25,000.00 in 2022). If there is no surviving spouse, the homestead allowance of $15,000.00 (adjusted to $25,000.00 in 2022) is divided in equal shares among the decedent’s minor children (under age 18) and dependent children. Children include the decedent’s natural and adopted children but do not include stepchildren, foster children, grandchildren or more remote descendants. The homestead allowance is in addition to any share passed to the surviving spouse or child by the last will and testament, intestate succession or elective share.
IV. Family Allowance (MCL 700.2403)
The family allowance is payable to the surviving spouse, if living, for the use of the surviving spouse and minor and dependent children; otherwise to the children or persons having care and custody of said children. If a minor child or dependent child is not living with the surviving spouse, then the allowance may be paid partially to the child (or that person having care and custody of the child) and partially to the spouse, as their needs may appear. The family allowance is in addition to any share passed to the surviving spouse or child by the last will and testament, intestate succession or elective share. The statute does not specify a maximum dollar amount, but the personal representative may grant up to $18,000.00 (adjusted to $30,000.00 in 2022) paid as a lump sum or periodic payments with additional amounts that may be authorized by the probate court. MCL 700.2405.
V. Exempt Property (MCL 700.2404)
The surviving spouse (or, if no spouse, the children of the decedent in equal shares) are “entitled to household furniture, automobiles, furnishings, appliances, and personal effects from the estate up to a value not to exceed $10,000.00 (adjusted to $17,000.00 in 2022) more than the amount of any security interests to which the property is subject.” If there is insufficient exempt property, the spouse or children are entitled to take any other assets of the estate necessary to make up the $10,000.00 value (adjusted to $17,000.00 in 2022). Unlike the homestead allowance and the family allowance, the definition of “children” entitled to receive exempt property includes all the adult children of the decedent, not just minor and dependent children. “The decedent may exclude 1 or more of the decedent’s children from receiving exempt property or assets to make up a deficiency of exempt property … by either of the following means:”
- “The decedent by will expressly states that “[t]he child takes nothing” OR “[t]he child takes an amount of $10.00 or less from the estate.”
- “The decedent by will expressly states that the child is not to receive exempt property under this section.”
YOU SHOULD EVALUATE YOUR ESTATE PLANNING AFTER MAJOR LIFE EVENTS LIKE MARRIAGE, DIVORCE AND CHILDBIRTH
If Mr. Ledger’s Last Will and Testament from 2003 was probated in a Michigan probate court, then Matilda could have made a claim to receive the entire estate as an after-born child not intentionally omitted since the will did not substantially leave the estate to Matilda’s mother. These provisions in the Estates and Protected Individuals Code to take against the terms of the will only apply to spouses and children, not other relatives. Furthermore, if the decedent had placed all of his assets in a trust before death, then there is no right under state law for the spouse to make an election or a child to take a share against it if they were not provided for (with some exceptions for allowances and exempt property). It will never be known if Mr. Ledger’s estate planning in 2003 was consistent with his wishes and desires that existed before his death in 2008.
If you created a will or trust in the past to ensure your wishes are carried out, then you have planned well ahead of most people. However, you should continue to review and evaluate whether that estate plan is still right for you after major events occur in your life such as marriage, divorce and childbirth. You should take steps to ensure that your spouse and children are taken care of before the unintended effects of intestate succession or an obsolete document defeat your plans. A skilled probate and estate planning lawyer can help you determine if your current wishes are still reflected in your paperwork.
If you have further questions or need legal assistance, then do not hesitate to contact the experienced attorneys at Kershaw, Vititoe & Jedinak PLC for assistance today.