On-Going Planning: Generic Estate Plans Still Create Unique Post-Mortem Issues

Your estate plan is generic. I can almost guarantee it. Sure, perhaps 1% of people have something original, fantastic and truly thoughtful created for them, but (much like movie plots) there are somewhere between 9 and 14 standard estate plans out there for 99% of the population. That is because only .25% of us are truly wealthy enough to justify non-traditional planning, and .75% have the actual need for original content. Congratulations: You are normal.

When you die, however, your estate is unique, special, its own miracle or monster. You have accounts at different financial institutions than everyone else, you leave behind a family with different relations, health concerns and creditor issues than everyone else, and leave assets to certain people in certain ways. The subtle nuances of your estate plan—and your financial or personal situation at death—become very important upon your passing! This means its better to be in the habit of maintaining regular contact with your attorney and family members to inform them of any changes.

Example: I had one estate plan in which the decedent named her estate as beneficiary of her IRAs. This lead to a problem: The funds had to be taken out in 5 years’ time. While this in itself was a problem, it was worsened by the fact that (a) she didn’t have a Will, (b) her mother, who was next of kin, died immediately after her, so the assets then had to go to mother, and ultimately that (c) one of the eventual recipients was disabled, meaning that the accelerated IRA withdrawals were going to bump her off of Medicaid.

In another case, I had a client who died in 2010, leaving millions of dollars to his disabled wife who already had more than enough to live. The children wanted dad’s money to go to them. There was no federal estate tax in 2010 and these kids were saving 40% on every dollar passed on which equated to about $5,000,000 in savings. However, dad’s will clearly gave everything to mom, while her Power of Attorney (executed by her husband) restricted gifting and did not give her children the right to renounce gifts.

I bring these examples up because they both indicate instances in which clients could take steps to keep their attorney and family informed about their financial situation at any given point in time. Merely having documents isn’t enough: While we may always have 3 children and be married / divorced / have non-taxable estates / etc., the nature of our assets and families change outside of what these documents state. Make sure to keep in touch with your attorney so your estate may be transferred efficiently and effectively.

Q FOR U: When was the last time you reviewed your assets and family matters with your attorney?

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