Simple isn’t Simple in Estate Planning
Below is a great article on how “simple” estates can become very complicated in a hurry. We see this all the time. People just want to “keep is simple” and estate end up making things very difficult. Intestate succession in Leawood sounds easy, but can create a whole mess of problems later.
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Simple can get complicated in estate planning
In the last couple of months, I have met with several people who have told me they “just want to keep everything simple” when it comes to their estate planning.
What most people don’t realize is that creating a simple plan now can potentially create complex, time consuming and costly problems for their loved ones later. This is not to say that I recommend complex estate plans for every person or family. My most common response to the question, “What estate plan do you recommend?” is simple ” it depends. Here are a couple of scenarios in which simple planning can create unintended consequences.
Intestate succession is the simplest of all plans because it is automatic under Wisconsin law and requires no planning. The law simply transfers all assets automatically to your heirs or descendants. Under Wisconsin law, the first heir is the husband or wife, followed by biological and adopted children. If there are children from outside the marriage, those children are usually entitled to some of the assets, too. If you are not married and have no children, then parents are next, followed by siblings. Surprisingly, many families fall into this category due to lack of time, the costs involved, or the idea of talking about death and the transfer of assets is uncomfortable or even stressful. This is more common now due to the increase in second marriages which create the “yours, mine and ours” situation.
Consider the following scenarios:
» Scenario 1: Married couple with children ages 21 and 25. No one has a written estate plan. If both spouses pass away, the three children would split everything equally. A probate filing most likely would be required which will take between six months to a year to complete at a minimum. Once the probate is finalized and the children receive their inheritance you might ask yourself what the children would actually do with the assets. Whatever they want. What if one of them had a substance abuse issue? What if the oldest child was married and passed away after the parents? The spouse would receive half of the in-laws’ estate before any grandchildren. The spouse would also be entitled to half of their spouse’s inheritance in a divorce situation.
» Scenario 2: Second marriage, each with minor children from previous marriage but no common children. If one spouse dies, all nonbeneficiary designated assets will not necessarily all pass to the surviving spouse. This would include real estate owned by the deceased spouse and the personal property. Any assets the deceased spouse transferred by beneficiary designation (such as life insurance, 401k, IRA) could go to the minor children, if named, but their guardian would have control over the assets. This would most likely result in the ex-spouse having control over the assets as the minor children’s guardian.
These scenarios do not change much even if the married couple drafted simple wills. It may allow each person to bypass their spouse in favor of children, but it will not prevent the requirement for probate. You can avoid probate for real estate by drafting a transfer on death deed and name beneficiaries, even minor children, but that does not protect it from creditors, divorces or guardians. Similarly, drafting a will does not protect assets from adult children’s choices or divorces. A “simple” plan may be appropriate for some, but as always, it depends.
Estate Planning is really about comfort. What estate planning is everything about is finding the right devices to execute your basic needs. What that indicates is that we make use of the most advanced legal documents to effectively implement your desires. We customize each and every strategy so that you get exactly what you want. We do this using the most current devices so that we can prepare a personalized plan at the most affordable possible expense. Kindly call us today with any concerns.
The Eastman Law Firm is an estate planning law firm. We focus on estate planning so that you can be guaranteed that you are getting the most up to date techniques.
Phone: (913) 908-9113