The Case of the Pre-emptive Blunder – The Worst Estate Planning Mistake I’ve Ever Heard
August 31st, 2009 Filed under: ab trust,Executor Fees,sample wills,Trusts attorney — Estate Planning Author
�His wife was in the early stages of Alzheimer’s disease.�Determined not to let the entire family estate be ravaged by her nursing home costs and knowing his wife would eventually be incompetent to sign documents or manage assets, Joe decided to transfer all family assets into his name, removing his wife from all ownership.
He figured that when his wife died, everything would already be in his name, thus avoiding the need of an expensive estate plan. He also assumed that without assets, his wife could be covered by Medi-Cal (California State provided care) and the estate would be safe.
Joe was able to accomplish the property transfers before his wife became incompetent, which she eventually did.�Joe’s plan was working perfectly, or so he thought.
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Then, as all too often happens, the unexpected event occurred.�Joe dropped dead with a heart attack.�The only estate plan Joe had for himself was an old Will leaving everything to his wife.�He never figured that she would outlive him.
All the family assets passed to Joe’s incompetent wife and became available to the nursing home to pay her bills.�Of course, by then, it was impossible for Joe’s wife to set up an estate plan.�This was exactly what Joe was trying to avoid.�Joe’s estate went into probate and a judge decided how to handle the estate.�Of course, the estate had to pay a percentage of the assets to an attorney as well as probate court fees and costs.
When his wife died, the estate went through probate a second time, incurring additional attorney fees and court fees.�Also, by taking his wife off the property, Joe lost tax benefits which would have been saved by a Living Trust.�It is also likely that Medi-Cal would have seen through the transfer from his wife to himself and gone after reimbursement from the estate, anyway.
A simple long term nursing care policy would have protected the estate from being grabbed by the nursing home to pay bills.�A Living Trust would have solved the other problems.�A Living trust provides for incompetence.�A Power of Attorney for property management (a document that provides for estate management during periods of temporary or permanent incompetence) would have made Joe’s job easy.
When Joe died, the successor trustee (the person named to handle your trust after your death) would have stepped into Joe’s place and everything would have continued without courts or attorneys.�When Joe’s wife finally died, the estate would have been disbursed according to their wishes without attorneys or courts in two probates, and without a guardianship proceeding to manage the estate for his incompetent wife.�The tax savings would have been preserved.�How expensive was no estate plan?
I have prepared thousands of Living Trusts over the last 20 years, but the cases that haunt me are the ones I didn’t prepare.�Just like the above situation that cried out for a Living Trust.�I’m also talking about the folks who started the process, but delayed acting until it was too late — The wife who called me after her husband died, the young person whose parent became incompetent, the heirs who got 33% less on the sale of their parents home because it had to be sold through Probate, the son who had to sell the family business to pay the estate taxes that could have been avoided.��� Procrastination is the enemy of estate planning.
Even one day’s delay can be too long.�I have never had a client say they wish they had waited longer.�I have never had a client regret having a Living Trust.�Maybe you will be fortunate and a short delay won’t matter, but for someone out there, tomorrow is already too late. While I would be happy to prepare your Living Trust documents, if you don’t contact me, please contact someone and get your trust started.
The material contained here is informational only.� It is not legal advice, nor does it consider anyone’s specific legal needs.� For discussion of your personal situation, I recommend that you seek advice from an attorney in your state of residence.
To avoid the ravages of probate, outrageous attorney fees, and astronomical death taxes visit my website by clicking the link below.
http://www.internet-living-trust.com
