How Estate Plans Can Fail You


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Yesterday we had nine earthquakes in the Reno area, with magnitudes ranging from 0.6 to 4.2. These are just the latest in a series of quakes that began way back at the end of February, all clustered a little north of town. And while things rocked and rolled, there was no damage and no-one was hurt. Naturally the news last night was full of earthquake information and planning/survival tips, etc. One seismologist talked about the potential for a “big one” in our area and what that would look like if it happened.

All this talk about the “big one” got me thinking about mortality and planning in general. Some of you know that I’ve added Estate Planning to the line-up of services my company offers, through my new associate, who is an estate planning paralegal. We were talking today about some of the problems she’s seen in her career, and how they could easily have been avoided.

Living Wills

Let’s start with Living Wills. Most of you reading this will have heard at least something about the Schiavo case in Florida and the need for Living Wills. Those are the documents that instruct people on your wishes in the event you can no longer speak for yourself. In the Schiavo case the lack of a Living Will led to years of heartbreak, frustration, anguish and litigation for her husband and her family when they could not agree between themselves on whether or not she should be removed from life support. Living Wills are extremely simple and inexpensive to create, maintain and update, and are something we should all have.

Regular Wills

Living Wills aren’t the same as a regular Will. A Living Will tells people what to do with your body if you can no longer speak. A regular Will tells people what to do with your stuff after you pass over. It can be written in broad strokes (all to my spouse, all to my children in equal portions, etc.) or extremely detailed (I want Aunt Betty to have my silver teapot with the angels dancing on the lid). The biggest problems with regular Wills are (a) lack of signature, (b) multiple, conflicting copies; and (c) beneficiaries signing as witnesses. If you don’t sign your Will it’s void. End of story. If beneficiaries sign as witnesses you’ve also got a problem, because of the potential for a coercion claim. And if you update your Will without destroying the old copies, you can almost guarantee someone will raise an argument later.

But even if you’ve got it properly signed and witnessed, and have destroyed all the other copies, a regular Will by itself still doesn’t get you out of Probate. That’s the name for the legal process of distributing your assets and settling your debts after you pass on, and it can be an expensive and time-consuming process. Probate will generally follow your Will (if you’ve got one), but not always. The only way out of that expense is to make sure you have a Trust.

Trusts

A Trust is like a Will in that it sets out where you want your stuff to go, but it’s more than that. It’s a place to park your stuff during your lifetime, while you’re still collecting it. The biggest problems with Trusts are (a) lack of capitalization, and (b) lack of updating it.

If you don’t put anything into a Trust it’s void – again, end of story. There has to be at least one asset retitled into the name of the Trust to make it valid and legal. Anything that you forget, or overlook getting into the Trust goes into Probate instead.

Worst Case Scenario

But when you forget to update the Trust itself, all kinds of bad and sad things can happen. My associate, Myra, was telling me a sad story about a woman who came into her former office awhile back to probate her husband’s estate. She’d been married for 40 years and her husband had only recently passed away. They had modest circumstances … very modest, and had little more than a trailer home.

The problem came when the estate was being settled. It turned out that her husband had created a trust … before they were married. It had never been updated, and under the terms of the original trust, his ex-wife was entitled to everything. And even though more than 40 years had passed, she was holding a grudge. She’s fighting hard to keep everything (what little there is), while Myra’s widowed client is elderly, poor, and alone. This case is still in the legal system, and probably will be for some time. I’m sure if her husband was still alive he’d be horrified.

Most of us don’t want to spend an inordinate amount of time thinking about our death and what happens afterwards to our families and loved ones. That’s understandable … but without some forethought our families could be left grieving AND with a huge, expensive mess.

We just had another quake (magnitude 3.3) while I’ve been writing this blog. Unless you get clear on what you want to happen to your estate, the government will handle it for you … and that may be no-one’s idea of a good time.

Contact Us for More Info

If you’d like to know more about Living Wills, Trusts and regular Wills we’d be glad to help. Drop us a note at info@businessfirstformations.com or call us at 775-338-2598.

Here’s the Deal!

Myra and I have developed a complete estate plan to help you out. We offer all three of the things I’ve discussed – Living Will, regular Will and a Trust, along with many other documents, including a Power of Attorney for your finances, a Declaration of Desires for your specific personal bequests, an Assignment of Personal Property, a Trust Certificate, Burial/Cremation Instructions, Grant/Bargain/Sale Deeds for property that needs to be formally transferred, and help with preparing the Schedule A to your Trust.

You’ll have our full support, email and phone access throughout, and we’ll help you make sure real estate transfers are done and recorded properly. Normally this package is $2500 but for everyone who’s a member of the TaxLoopholes website community we’re offering a special deal. For the next 30 days we’ll give you the entire program for just $1200. This is a limited time offer, so please don’t wait!



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