Is Your Legacy a Gift or a Curse?

Most people work hard for what they have. If they’re smart, they will set goals and make plans to reach those goals. People who have children often want to leave something for their children when they pass. The process of laying out what you want to happen to your assets after you die is called estate planning. Estate planning can take many forms, but the goal is always to determine who gets what once you’ve gone. Often someone comes to us when a loved one has passed thinking they had an adequate estate plan, but because they made some mistakes, what they have is a mess.

It is impossible to predict every outcome of every decision, but there are certain fact patterns that repeat and, therefore, mistakes can be foreseen and, hopefully, avoided. What will follow are some of the common mistakes in estate planning that lead to litigation.

1. Procrastination. The biggest mistake in estate planning is failing to plan at all. Many people think, “I don’t need a will because I’m too young,” or “ I don’t need a trust because I don’t have a lot money, but when I do, then I’ll hire a lawyer,” but they never do. They never consult a lawyer about a trust and when the time comes, what’s left behind is a mess for the courts to sort out.

This may not be a serious problem if the person doesn’t really have any assets or debts and the family members all get along, but it becomes a serious problem when the person has assets, when the person has creditors, and when families aren’t speaking. In the event the person owned assets in their own name that need title to be transferred, a probate is required. In probate, the guiding principle is what the deceased wanted to happen. Without any estate planning documents, the court will determine that what the person wanted to happen is what the statute says will happen. If the deceased person ever told anyone that they were going to leave someone some asset, litigation can follow. In that case, the person who is promised something may attempt to claim that there was a will and that the person who had access to the deceased papers is deliberately hiding it, or that a trust was created for their benefit.

The number of possible suits that can arise when someone dies leaving promises but nothing in writing is too much to cover in this blog post.

2. Incorrectly Preparing a Will. In the State of Florida, a will has to be signed at the end by the person creating the will, known as the testator. It must also be signed by two (2) separate witnesses. If a person creates a will but does not sign it, it is not a will at all. If a person creates a will and signs it but does not have two (2) witnesses also sign, it is still not a will. If the person has signed the will and has one (1) witness to the signing, it is still not a will. In all of these cases, the will shall be rejected by the court and the intestate law will control.

3. Secrecy. Many people are uncomfortable talking about their own death and their money. Talking to people about your estate plan means discussing your own death and your money. For many people this is nearly impossible to do. They go to a lawyer, they sign estate planning documents, get witnesses to sign (usually those witnesses are employees in the lawyer’s office), and they never mention the plan documents to anyone, and they hide them in a safe place. When they die, they are leaving behind an open question because their family members won’t know that they made an estate plan, they won’t know who the lawyer was to ask, and they won’t know where the deceased banked to know if there is a deposit box there that might have important documents in it.

4. Failing to Carry Through. This is less of an issue with wills because the will is either drawn up and signed or it’s not. This is more of an issue with other types of estate planning documents such as a trust where the documents are created, but unless the title to the property is actually changed to the name of the trust, the trust is incomplete and has no control over the property that isn’t in the trust. If a trust says “upon my death all of my money goes to my favorite charity” but the money is not in the trust, the charity is out of luck and it may bring a suit claiming that there is an obligation on the beneficiaries to do what the decedent wanted done.

5. Having Too Much Faith in Your Family. Probate disputes and lawsuits are usually among family members. As a parent you want to believe that your children will get along, but realistically speaking, that is not always the case when money is involved. Many times the testator says their kids get along and they will work it out, but when the time comes, they don’t work it out; they file suit instead.

The best way to avoid a litigation in your estate is to make it as clear as possible what you intend for your assets after your death or even transfer assets before you die. The most obvious way to make sure what you want done happens is to give away all of your property while you are alive. This is not usually a good plan for obvious reasons. And so, through the use of certain trusts and deeds, you can direct your property to beneficiaries without depriving yourself of the use of the property while you are alive.

In closing, plan early. Do the work. Follow through. And talk about it. Don’t hide your plan from your family and if you change it, let people know you changed it. Lawsuits are a process of taking a question to a court when the answer is not clear. But if you are always clear as to your intentions and you make them known early and you use the proper forms, you will very likely be able to leave a blessing to those you leave behind.