Estate planning

We’re all supposed to love our family members, especially our parents and grandparents. However, there’s one surefire way for them to leave an acidic taste in your mouth after they’re deceased. I’m willing to bet your parents and grandparents don’t share their estate planning with you, which can be tragic if their affairs aren’t in order and haven’t been updated in decades.

If you don’t wake up tomorrow morning, tell me what’s gonna happen to your family. If you have children, do you have life insurance in place? If nothing else, purchase a 20-year $500,000 term life policy to get your kids through high school and college. Your surviving spouse won’t be freaking out how to pay the mortgage if you have life insurance in force. Do you at least have a will, if not living trust in place? If not, the courts will decide what happens to your assets a year after your death.

I highly recommend anyone who’s getting up there in years to take your current estate plan (will or trust) along with all your most recent bank and brokerage statements and the titles to your various properties to a third-party estate attorney to have them review your current estate plan. It will be the best few thousand dollars spent to find out that your assets will actually go to where you want them to in a timely manner and the tax man won’t be taking large bites out of your estate.

We’ve all heard stories of assets not being titled properly. Even worse is when one family heir drops a monkey wrench by challenging the will or trust. A friend of mine told me about one of their siblings who objected to the estate and stalled things for seven years in the courts. The attorneys made out great billing at $500 per hour at the expense of all the heirs because one person objected.

You’d be surprised how many folks in the banking industry have to deal with someone who didn’t name a beneficiary to their bank accounts. Without that one simple step, a financial institution needs to wait for a court order to distribute any assets. The same goes for your retirement, 401k and IRA accounts. Please name a beneficiary, otherwise it will be a minimum six months to get a court order.

I’m currently assisting a family with a long drawn-out estate because the surviving spouse (their mother) relied on an attorney from 30 years ago who didn’t specialize in estates to design her estate plan. Unfortunately, she got up there in age and started transferring money from one financial institution to the other, not naming beneficiaries and not keeping assets titled in her trust. So, after spending an estimated $100,000 over 30 years on her estate plan, she handed her heirs a giant headache.

The heirs first had to deal with their father’s estate from 36 years ago. Instead of the usual giving 50% of your assets to the surviving spouse and 50% to your children, this dad gave 50% to the surviving spouse and 50% to his children in trust, upon the death of his surviving spouse (their mom). The wife ended up living an additional 36 years after her husband’s death, so the adult children in their 30s, 40s and 50s didn’t get any funds from their father’s death until they were in their 60s, 70s and 80s. Not sure why his attorney set it up that way, but it left a lot of bad feelings among the heirs why they didn’t get their money when they were much younger in life when they could have used the money while raising children.

The second issue is the attorney for the mother took all the deceased father’s assets and set them up in two separate trusts, a marital trust and a bypass trust. Why two separate trusts, I’ll never know. So now 36 years later, all the various financial institutions asked for copies of the marital trust and the bypass trust, which there never were any trusts to begin with as this was a pour-over will. Major problem as every financial institution said “get a court order naming the executor as beneficiary of the trusts before we can release any funds to you.” There goes another nine months and $20,000 in attorney’s fees.

The goal is to have your children remember you fondly, not cry out loud because you left them a financial and legal nightmare.