Of course, it’s always best if we can learn from OPM (other people’s mistakes) rather than our own, and we’ve included the following post-Halloween horror stories in our Geyer Law blog with an eye towards edification rather than scare.
- Examining the trust document of a new client, the attorney noticed that the trust was set to give $50,000 to each of two people. The client, however, had no idea who those people were! What had happened was that an adviser unfamiliar with estate planning had cut and pasted text from a sample document, without altering the names to fit this very client. Moral: Trust documents should be examined and updated frequently.
- Brandon had received a multi-million dollar settlement after being in an accident. The money was held in a trust. Brandon named his wife Emily as 80% beneficiary of the trust, with remaining family members named as beneficiaries of the remaining 20%. Ten years into the marriage, Emily filed for divorce, but two days before the divorce decree was filed, Brandon became ill and died. Since, under Arizona law, the divorce was not final until the filing, Emily inherited $14.4 million dollar, while all the other family members divided $3.6 million. Moral: When filing for divorce, change your estate plan immediately.
- When the brokerage firm asked Susan to name a beneficiary for her IRA account, she reasoned that naming her estate would make it easier for heirs to settle her affairs. The result was that, when Susan died, her IRA money was tied up in probate and eventually went towards paying off her credit card debt and “upside down” mortgage loan. None of the special “stretch” IRA tax deferral techniques could be used by Susan’s heirs, who lost out on continuing to earn compound interest for years to come. Moral: Do not name your estate as your IRA beneficiary.
- Harry’s combined Durable Power of Attorney and Designation of Healthcare Representative named his daughter as representative, since he was alienated from his son. The daughter took care of Harry in her home and paid for home healthcare professionals to come in. When the daughter felt it was time to move her father into a facility, the son filed a petition to be named caregiver, on condition he be paid a monthly amount equal to the home healthcare fees the daughter had been paying. There was extensive and costly litigation in the dispute between the two children. Moral: Discuss your family situation and develop a specific contingency plan.
At Rebecca W. Geyer & Associates, we agree. Life's journey is fraught with changes that require careful planning, we tell our clients. It’s not about documents – it’s about protecting protect the people most important to you and the assets you worked a lifetime to achieve.
- by Ronnie of the Rebecca W. Geyer & Associates blog team