On Saturday, The New York Times profiled a successful New Yorker who built an empire. The twist is he died without a will, and there are no heirs to his sizable fortune. The estate is valued at close to $40 million and is the largest unclaimed estate in New York State history, according to the story, "He left a fortune, to no one."
If no heirs can be found, the estate, in most jurisdictions, escheats to the state. That basically means the state takes ownership of the unclaimed estate. People don't have to die for the state to take their money; just leaving it unattended for a few years is enough for some states to call dibs on the cash.
Back to estates: "The state normally holds it in an account for a while, and after a defined number of years without further claims, the state can spend the money," says attorney John J. Scroggin, founder of Scroggin & Co. in Roswell, Ga.
"It is very rare that you are unable to locate some relative. Years ago, my mother, her sister and brother inherited money from a lady who I understood was Wild Bill Cody's daughter or granddaughter who died in a nursing home without any heirs -- they were fourth cousins, several times removed, and did not even know the lady existed," he says.
The valuable lesson here is that estate planning matters. Even the most bare-bones estate planning can direct funds to charities or organizations that individuals care about during their lives, even if there is no one specific to whom they'd like to give their money.
Two birds, one stone ...
Then again, with the nation's debt ballooning at an astonishing rate while state coffers run dry, maybe more Americans will intentionally leave their wealth to the government.
"In 40 years of practice, I have only had one client purposely leave money to the government, but he required that it must be used to pay down the deficit. At only a couple hundred thousand dollars, it was probably a useless gesture," Scroggin says.
After donating a portion of yearly earnings to the government, most people probably feel like Uncle Sam, and his state-level cohorts, got enough of their money.
Do you have an estate plan?
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Senior investing reporter Sheyna Steiner is a co-author of "Future Millionaires' Guidebook," a personal finance e-book written for Gen Y by Bankrate editors and reporters. It's available at all the major e-book retailers.