Your Estate Plan:
Prepared or Unprepared
John McKindles
February 2011
More Articles on Dealing with Trusts
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Everyone has an estate plan. The only question is: Is it prepared or unprepared?
While a prepared plan may entail some present cost, an unprepared plan will
doubtless involve more cost (and probably heartache) later.
Here is one true story, of many, that illustrates the importance of estate
planning, regardless of the size of your estate.
Jack and Jill were
cousins who had a close relationship during their youth. As adults, they had
sporadic, but positive, contact with each other. Jill did well for herself as an
employee of a state government agency. She prudently put aside money for her
retirement through various savings plans. She married late in life, and she and
her husband, Darth, had no children.
Three years after she
married Darth, and before she retired, Jill died unexpectedly, leaving
non-probate (i.e., death beneficiary) assets of approximately $400,000. Of that
amount, Jill left about $310,000 to Darth and the remaining $90,000 to her
cousin Jack (as alternate beneficiary after Jill’s predeceased father).
Darth, dissatisfied that
he did not get Jill’s entire $400,000, contested the $90,000 Jill had left to
Jack. Consequently, the administrator of Jill’s retirement fund interpleaded the
disputed $90,000 into Superior Court, and the battleground was set for Jack and
Darth. Jack hired me to represent him, and Darth retained counsel as well.
The paramount issues
were:
Jill’s intent issue was
fact-driven, and witnesses were presented in support of both sides.
As for the second issue,
the parties eventually agreed that $10,000 of the $90,000 that Jill left to Jack
was community property. Jack’s position was that Darth was entitled to his half
of the community property amount ($5,000). Conversely, Darth wanted the entire
$10,000.
After a trial, the court
ruled in Jack’s favor, i.e., that Jack should get the non-community portion of
Jill’s bequest ($80,000) and half of the community portion ($5,000), and that
Darth should get his $5,000 community interest.
The unhappy Darth
appealed the trial court’s ruling. Fortunately for Jack, the Court of Appeals
affirmed the judgment and also awarded Jack his costs related to the
appeal.
Epilogue
Though I handled the
litigation, I did not know Jill prior to her death. In the process of
representing Jack, I came to know much about this impressive lady and believe
she would have regretted this legal battle. Had I (or any experienced attorney)
been able to timely advise her, some simple tweaking of her estate plan might
have avoided the above scenario.
As you reflect on the
dispute between Jack and Darth, please bear in mind that everyone has an
estate plan. The only question is: Is it prepared or unprepared? A prepared plan
may entail some present cost. An unprepared plan will doubtless involve more
cost (and probably heartache) later.
To help
you understand your options and make the appropriate preparations, you should invest in
at least a consultation with an attorney who, in advising you, can rely on
professional experience and training in the estate planning area.
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