Q. My husband keeps procrastinating when it comes to wanting to do our estate planning. I brought up some things that could happen when someone dies without proper planning in place, but it hasn’t been enough to convince him. Can you share some truly eye-opening disaster scenarios to help me persuade him to get started? Thanks so much for your help!
A. We often delay starting things because they seem arduous and unappealing. It’s okay if you put off doing the dishes or folding your laundry for a couple hours, but when it comes to estate planning, it is not a time to procrastinate. Read these disaster scenarios to find out why!
1. Not Naming a Legal Guardian for Minor Children
Case study: Amy and her husband, Steve, as young and healthy parents, spent little time thinking about a guardian for their minor children because they assumed it would never be needed and if it were needed, the role would automatically fall to the right person. They didn’t see the need to specifically name a guardian, as they assumed that Amy’s younger and able-bodied sister would be the logical choice and thus appointed to the role.
Amy and her husband sadly passed away in a car accident. The decision of who would act as guardian fell to the courts. The legal system did not know the parents’ preference for guardians, giving an opening to a different family member or friend to petition that they would be the best guardian for the children.
This is exactly what happened. Steve’s mother, who was not in the best of health, petitioned the court to act as her grandchildren’s guardian. She had medical concerns and other age-related restrictions that made the role difficult for her. A couple years later, she died, and the children had to go through the trauma of losing their grandmother and their legal guardian, again.
How you can avoid this: If you have minor children and become ill or die, who will take care of your children? If you do not designate a guardian, the courts will determine who gets legal and physical custody of your children and is authorized to make decisions about your children.
While the court will almost always try to select a family member or a close friend for your child’s guardian, it might not be the person you had in mind. Not designating a guardian can be easily avoided — so it’s important to specifically name the individual you wish to fulfill this role in your last will and testament. In fact, this is the most important reason for families with young children to have a last will and testament.
2. No Advance Medical Directive
Case study: John, 55, exercised every day and ate well. While jogging one day, he felt a sharp pain in his chest and then a throbbing pain in his head. Another jogger called 911 when John collapsed to the ground. In the emergency room, the doctors determined that John had suffered a heart attack quickly followed by a debilitating stroke. While he lay in his hospital bed, unable to move one side of his body and unable to communicate, his family discovered that he never created an Advance Medical Directive or a Power of Attorney. This sparked a prolonged family court battle over who would be appointed as John’s guardian and conservator and whether to administer lifesaving treatments to prevent further cardiovascular events, with different opinions on what he may have wanted.
How you can avoid this: When you have a good Advance Medical Directive in place, a significant burden is lifted from the decision-maker and family who are trying to sort through various treatment options for the one they love during a stressful time. With a good Advance Medical Directive in place, your family and your health care professionals can also feel confident that they are following your wishes.
By doing incapacity planning, you will feel more in control of the future and more confident that future decisions will be made in accordance with your wishes.
Read more about Incapacity Planning here.
3. Not Updating Life Insurance or Retirement Account Beneficiaries
Case Study: Peter and Deanna were an unhappily married couple who decided to divorce. Two months after the divorce was finalized, Peter died in a car crash, leaving behind a life insurance policy and an IRA but no estate planning documents. Although Peter had two children from a previous marriage, he had failed to designate them as beneficiaries after his divorce.
Despite suing for the money, the kids ultimately lost the case, and the money went to the ex. Peter’s children were left with nothing but legal costs.
How you can avoid this: The beneficiaries you have named in your life insurance policies and retirement accounts are not enough. If you don’t have estate planning documents in place and update beneficiaries every three to five years or when an important life event happens, there’s a chance the wrong people will get the inheritance. Please read this article on the subject for more details on when to update your estate planning documents.
4. Naming an Untrustworthy Executor
Case Study: Mary, 52, recently lost her father, and her mother died when she was a child. Her father’s Will stated that his estate, including real estate in Virginia and Florida, and $250,000 in additional assets, would be divided equally among his four children. Mary’s sister, Jennifer, was the executor, which required her to open an estate in Virginia and in Florida because there was real estate in both states. Jennifer went to the probate court and opened an estate in Virginia, but was too lazy to do it in Florida, or perhaps she never really understood what she needed to do in Florida, and never sought legal advice. Instead, upon their father’s death, Jennifer moved into the Virginia home, which she lived in rent-free. She delayed the closing of the Virginia estate for over ten years, which proved to be very costly, and never did open up a Florida probate estate. All the while, Jennifer paid no utility bills, wrote checks for food and other personal expenses using the estate’s checking account, and bought many high-priced items using estate funds. The Florida property became run down and was eventually sold by the county in a tax sale. The whole time, Jennifer refused to give her siblings any information about what was going on concerning the estate.
How you can avoid this: Although it’s difficult to know how your death may change someone, you should always try to pick an executor who is completely trustworthy and financially stable. If you don’t have a family member that fits this description, you should consider naming a professional executor and trustee, such as a local trust company or law firm. If Mary’s father had named his lawyer or a trust company as his executor, the executor would have known how to handle probate in Virginia and would have known to open up a Florida ancillary probate estate and hire a Florida attorney to assist with the Florida probate in order to quickly sell the Florida property. Better yet, had Mary’s father created a living trust prior to his death, and titled both the Virginia home and of Florida home into the trust, the trust assets could have been quickly distributed to all of the siblings without any need for probate in either state. There would not have been the ten-year delay and the hefty fees of probate in both states, and Jennifer wouldn’t have been able to take advantage of the situation.
Without a Living Trust, the estate had to go through probate in both states. A revocable living trust could have provided how the real estate and other trust property would have been distributed at Mary’s father’s death, and saved his children a lot of time, emotional pain, and money.
Probate also occurs when you die without any estate planning in place. Read more about the nightmare of probate here.
6. Not Thinking You Have Enough to Warrant Doing Estate Planning
Case Study: Jane didn’t have a lot of money or assets. She rented an apartment and had very few assets to her name. She felt that she didn’t need to think about estate planning, because she thought, incorrectly, that she didn’t have an “estate.” When she died, however, her children fought over her rare Depression glass collection, which was actually worth a bit of money but had more significance because it reminded them of their beloved late grandmother.
How you can avoid this: The term “estate planning” can be a bit misleading to some because it seems to imply a large scale “estate.” People might not think to make smaller, more personal gifts, or they may even incorrectly assume that they have too few assets to justify estate planning at all. Even if the items that you have are not worth a lot of money, lots of people still plan small personal gifts, such as heirlooms, records, collectibles, and so on. It’s an opportunity to surprise loved ones and to share memories with them, even after you pass.
Why Estate Planning Is Important
If hearing those scenarios above is not enough, here is why estate planning is important:
- It makes sure your estate goes to whom you want, when you want, the way you want: You can leave assets to the next generation in equal shares, or determine how your estate is ultimately distributed.
- For parents of a minor child, it is critical that you decide whom to name as guardian(s) in the event of your untimely death. In other words, who would you want to raise your child if something happened to both of you?
- It saves your heirs legal fees, taxes, and time in settling your affairs: By planning ahead with a properly-funded living trust instead of a will or instead of dying intestate, you will avoid the expensive, complicated, and time-consuming probate process, thus aiding the grieving process and allowing families to get on with their lives.
- It allows you to protect the inheritance from children’s divorces or lawsuits: By leaving assets to your children in an inheritance trust, you may not only protect it from a divorce but also from creditors in the event your son or daughter ever gets sued.
- It gives you peace of mind so that you can get on with your life: When you have a well thought-out estate plan in place, you actually feel better. You feel safe and secure and have the peace of mind that no matter what happens, you have a plan to deal with it, and you have the right team in place to carry out your wishes.
Many people tend to believe that these disastrous scenarios won’t happen to them, but the reality is that they can and often do. The good news is that all of these situations can have happy endings with the proper planning strategies. This is precisely why you should work with an experienced estate planning attorney, such as myself, to get your planning in order today.
At the Farr Law Firm, we will help you identify the trust and estate planning options that are right for your unique situation, create comprehensive estate plans that address an array of future scenarios, and update your documents regularly to ensure they continue to match your current situation and goals.
Save Your Family the Headache — Get Your Planning in Order Today!
Here at the Farr Law Firm, we have strategies and proprietary Levels of Planning in place to help you plan for yourself and your loved ones. By having complete and appropriate estate planning and incapacity planning documents in place, you and your loved ones will have the peace of mind that your family’s needs will be adequately and properly addressed.
If you have not done Incapacity Planning, Long-Term Care Planning, or Estate Planning (or had your Planning documents reviewed in the past three to five years), now is a good time to plan and get prepared! Among other services, we offer peace of mind through our four levels of lifetime protection planning:
Level 1 — Incapacity Planning is about protecting your assets from lifetime probate.
Level 2 — Revocable Living Trust Estate Planning is about protecting your assets from lifetime probate and after-death probate.
Level 3 — Living Trust Plus® Asset Protection Planning provides protection from probate, lawsuits, home care, and assisted living expenses by allowing access to Veterans Aid and Attendance benefits, and nursing home expenses by allowing access to Medicaid.
Level 4 – Life Care Planning, Medicaid Asset Protection, and Veterans Asset Protection provides comprehensive planning and filing services, often at times of crisis, though this type of planning can be done anytime someone is beyond the first step of the Elder Care Continuum aka Aging Continuum.
Please contact us whenever you are ready to ensure that you have the appropriate level of planning:
Northern Virginia Elder Law Attorney: 703-691-1888
Fredericksburg, VA Elder Law Attorney: 540-479-1435
Rockville, MD Elder Law Attorney: 301-519-8041
Annapolis, MD Elder Law Attorney: 410-216-0703
About Evan H Farr, CELA, CAP
