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Read What Happens When Estate Plans Dont Work

By Alvin Chavez,2014-07-10 19:27
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Read What Happens When Estate Plans Dont Work ...

    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

    million dollars.

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

    religious allegiance.

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.

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