Read What Happens When Estate Plans Don’t Work
Please Don’t Let This Happen To You
True Story #1: A financial advisor who frequently refers clients to me for estate
planning had been encouraging one of his clients to see me for two years. At each
appointment with the financial advisor, and at each phone call, the financial advisor kept
directing his client to see me to help prepare his estate plan. The client was in his early
60s, very near to retirement. Finally, he scheduled an appointment with me. Three days
before the appointment he was killed in a freak automobile accident. He did not have an
estate plan. His spouse and child were devastated by his death. They went to a
downtown Atlanta law firm for the probate. It took more than two years to handle the
probate and distribute his assets to his heirs. Unhappy Ending: They paid the lawyers
roughly $150,000, (3% of the gross estate), to probate his estate, valued at $4 to $5
True Story #2: A woman wrote in her will that she was leaving all her assets to her
nieces in equal shares. The problem was that her only assets were 5 CDs that were titled
in her and her sister’s name. No one bothered to coordinate the ownership of the assets
with the instructions of the will. Happy Ending: Fortunately, we were brought into the
project in just enough time to catch the titling error and correct it. Without our help, the
CDs would have passed to the sister (our client), who, if she wanted to give them to the
nieces (which she probably would) would have had to pay a gift tax on the CDs.
True Story #3: A woman in a nursing home signed a will that had been created for free
by a friendly old lawyer. The lawyer failed to prepare and attach a self proving affidavit
to the will. As a result, at the woman’s death, one of the two people who had witnessed the will had to be located to sign off on the Interrogatories to the Will. The lawyer served
as one of the witnesses; a visitor to the nursing home served as the other. The lawyer
also inserted a provision into the will that named him to serve as attorney for the executor.
And last, the will contained a flowery description of this woman’s professed religious
beliefs. Unfortunately, the woman was of a faith that had beliefs exactly opposite of those
recited in the will. Unhappy Ending: When this became known, it was a source of
embarrassment to the family because she was widely known to be very devout in her
True Story #4: A father created a will leaving everything to his second spouse. Several
years later, after raising the child of his new spouse as his own, he adopted the child. A
few more years later he died. His will did not expressly contemplate the adoption of this
child at the time it was signed. As a result, the adoption invalidated his will, pursuant to
Georgia law. Unhappy Ending: As a result of having no legal will, his spouse, his
adopted child, and each of his children from his first marriage (whom he had not seen in
nearly 20 years) inherited equal shares of his assets.
True Story #5: A husband and wife owned a home that was titled in both their names. The wife died without an estate plan. The home was owned as tenants in common. Her
estate was deemed to own 50% of the home. Pursuant to Georgia law, since she had no
will or trust, her assets were divided equally with her surviving husband and each child.
Her children were minors at the time. The husband decided to sell the home and move
the family closer to where his family lived. In order to sell the home, he had to have the
Probate Court appoint Guardians for each of the minor children. They were paid out of
the proceeds from the sale of the home. When the home was sold, he had to set aside
each child’s portion of the sales proceeds into a very safe, low yielding investment
account that automatically turned over all the proceeds from that child’s share to the child
when the child reached 18 years of age. At that time, the child acquired full ownership
over the assets and could use them as the child saw fit. Unhappy Ending: The husband
had a legal obligation to support his children. Therefore, he spent all of his own assets on
their care before he could spend any of the children’s assets on their behalf. What’s more,
he had to file an annual account of his actions with the Probate Court every year until the
minor children turned 18 and received their funds.
True Story #6: A very old, self made wealthy businessman decided not to implement the estate plan that was recommended to him since it would have cost him $25,000 to
implement all the advanced tax saving strategies. Problem: Two years later when he
died as expected, his children and new wife had to pay over $520,000 in estate taxes that
would have been avoided if he had implemented the recommendations. Further, since the
vast bulk of his estate was the value of his business, there was not sufficient other assets
and cash to pay this tax. His children and new spouse had to get a loan to pay the tax bill.
A significant portion of the businesses monthly cash flow now goes to service this debt
and will continue to do so for several more years.
True Story #7: A married couple having a combined net worth of $1.2 million dollars set up a Revocable Living Trust that had tax planning provisions included as an A-B trust.
(This is also frequently known as a Credit Shelter Trust and Q-TIP Trust.) All their
assets were owned jointly except his life insurance and IRA, which listed his spouse as
the beneficiary. Upon the husband’s death, all of the assets passed to his wife, who was
about 66 years of age. Before she could file a Disclaimer, she took the dividends off the
investments and used them for her living expenses, just as the couple had been doing for
the prior four years. Unhappy Ending: As a result, none of his assets went into the tax
plan - and when his wife died four months later, the children had to pay over $200,000 in
estate taxes, which could have been avoided.
True Story #8: A couple signed reciprocal wills providing tax planning trusts for the
benefit of the surviving spouse. The husband died and the local bank took over as trustee
of the trust. During the next two years the bank twice merged into larger banks. The
eventual trustee was a national bank headquartered out of state. The bank trustee
invested the funds in the most conservative investments they could find. Unhappy
Ending: When the stock market was making it largest gains in history, the woman’s trust
yielded a mere two percent in income. The bank took 75% of this amount in fees for
acting as trustee and as their commission for acting as selling agent on the investments.
Each time the surviving wife wants a distribution from the trust, she must speak by phone
with a young trust officer who changes several times each year.
Please don’t let even one of these things happen to you.
Call Mike Bascom today at 770-594-2288 and
ask him to help you avoid these costly, stressful problems.