Why You Might Not Want a Simple Estate Plan
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Many people come in to see me with the notion that all that they need and want is a “simple” estate plan. Generally that means no living trust, and a will with no trust provisions for surviving family members. I think the main motivator for this is lower cost, but probably also the desire to avoid taking the time and energy to comprehend the workings of a more complex plan.
Simple plans are less expensive and easier to understand, but at what cost? If you have children, grandchildren, or others that you care about and wish to see benefit from your estate, a simple plan offers absolutely no assurance that that will happen.
Here’s a couple of brief examples:
1. Joe dies and leaves all of his assets to his wife Julia. They have one child, Jack. A few years later, Julia marries John, and they buy a house together with Julia’s money, and she names John as the beneficiary of the IRA that she rolled over from Joe. Julia then dies, with a Will that names Jack as the sole beneficiary. However, despite what the Will says, John gets the house, the IRA, and under NC law, one-fourth of all other property. Jack is left with little of her estate.
2. Lisa has three adult children, Larry, Louise, and Lonnie. Louise and Lonnie each have two children of their own. Her will provides that each will receive one-third of the estate. Lisa dies, and each child receives $200,000. Larry is uses the money to buy a house with his wife. They then divorce, and the judge awards her the house. He is left with nothing. Louise, ambitious but with little business sense, uses the money to start a business. The business fails, and she and her children are left with nothing. Lonnie puts the money in a savings account in his name, but his Will provides that his wife gets everything. Lonnie dies, and a couple of years later his wife remarries. Sometime after that she dies, and the new husband gets everything. Her children, Lisa’s grandchildren, are left with nothing.
These types of circumstances occur everyday and impact many, many families. Children and grandchildren are unintentionally disinherited, and in-laws and creditors end up with the family legacy.
How do you prevent these types of things from happening? Talk to your estate planning attorney about using a trust or trusts as part of your estate plan. It will cost a bit more, and take some more time to implement, but the savings and peace of mind can be priceless.
