Are you leaving a behind a mess?

I’m sure you’ve heard horror stories about people who didn’t do estate planning and left a mess for their family. Sometimes just not having a good, current Durable Power of Attorney can create huge issues and aggravation.

A few weeks ago, a couple came to me for an estate planning consultation. Their biggest concern by far was protecting a 17-year-old son with a mild developmental disability. They also have a young adult son who cannot handle finances. They had some important and fairly unusual matters to review and property overseas.  They are currently “sleeping on it”.  This is unusual in our office and in this case especially, a very bad idea.  Let me give you an overview of this situation.

Facts:   The couple has an estate of approximately $3 million, including property in another country. By their own admission, pursuant to the laws of this country, if they both pass away and do not do proper estate planning, any and all property overseas would go outright to their children. They have no documents prepared.

Plan:  We had made some important suggestions to protect the family. Specifically, we suggested that all assets are set up in trusts for the children and they could designate how and when they receive assets. We will also do a Special Needs Trusts, assuring that the 17-year-old son will have money for his lifetime, that he cannot spend it freely, it will not go to creditors and that he can preserve his public benefits. We also planned to contact attorneys in the country where the property is located to put that in order as well.  We were planning on doing wills, durable powers of attorney and health care surrogates and living wills and any other documents necessary to effectuate the plan.

The “current estate plan”  Clients often think that when they put off doing their estate plan that they do not have a plan “yet”  However, we all have a “default” plan; that is the things that will happen if we do not actively do a plan.  

In this case:  If both were to die, this is, at minimum, what would happen:

•  Assets would go outright to both children,
•  leaving them the ability to spend freely and 
•  making the money subject to their creditors and
•  totally compromising the younger son’s public benefits, and   
•  these children would need to consult attorneys in another country with absolutely no direction on how to do this.

Do you have a “real” estate plan or do you have a “default plan”?  Do you think that a real plan is only important when there is a large estate.  You are wrong.  No matter what the size of your estate, your “default plan” is almost certainly going to create issues for your family either during life or at death.