A solid estate plan is a great disaster-avoidance tool. The majority of Americans don’t have so much as a Last Will and Testament in place, and that’s a recipe for family feuds and assorted complications.
Every now and then, though, an estate plan can actually cause a disaster. Almost always, it’s because the person doesn’t consult with a professional first, or because they forget to update their plans following major changes in their lives.
Forbes recently assembled six such scenarios, all of them real-life stories about families learning the hard way that prudent planning matters. Some are amusing, others distressing, and they all serve as encouragement to give our estate plans a second look.
There was, for instance, the man whose wife died, followed a short time later by his own death. Since she was the only beneficiary listed in the will, his estate went to his next of kin — a woman he’d never met living in a country far away and his late wife’s estranged daughter. Not quite what he intended!
Another woman was distressed to learn that her husband had never updated his will after divorcing his first wife. Much to his widow’s surprise, most of his major assets — including a big life insurance policy — went to his ex. Meanwhile, the widow had to split the rest of the estate with her mother-in-law (as you might have guessed, they don’t get along).
Gleaning a few life lessons out of these cautionary tales, Forbes offers the following bits of advice to all of us who are still among the living:
- Chose your Personal Representative with care. Just because a child was born first, doesn’t mean he or she is the best choice.
- Update your will and ensure that it’s valid (don’t simply assume).
- When crafting wills/trusts, dispose of your estate’s assets with specificity.
- Amend your list of beneficiaries after any birth, death, wedding, etc.
- From a tax perspective, never underestimate the value of your personal property.
- Don’t give large sums of money to minors without restrictions.
Sage advice, certainly! Having an estate plan is very important, but it’s equally essential that it be capable of carrying our your intended wishes. An outdated or sloppily drafted estate plan can have unfortunate and unforeseen consequences. Diligence really does pay off.
If you’d like to make doubly sure that your own estate plan is safely outside the “disaster zone,” please don’t hesitate to contact me for an easy review.