One of the benefits of a well-planned estate is the ease at which your assets pass to your heirs. Here we will share the tales of three different estates; I’ll discuss the ease, or difficulty the probate administration presents, and what was done, or not done, that led to these results.
The first estate is valued at near $1.5 million dollars! It is the easiest of the three to administer! The gentleman had placed all of his real estate in a trust years ago. His sons had already taken over as successor trustees as before his death, their father had become incapacitated. Upon his death, the administration of the trust continued with no change.
Upon his incapacity, I became this gentleman’s conservator. Upon marshaling his assets, I saw his largest holdings were three annuities that the father had designated beneficiaries on. Therefore, I held these assets as they were, determined not to liquidate them unless absolutely necessary. It wasn’t necessary so these annuities, the vast majority of the estate, passed directly to the beneficiaries escaping probate. Thus, almost the entire estate passed outside of probate in a matter of weeks. Now, is this the answer in every case? No, as our second tale will illustrate.
Our next tale is an estate of almost $1 million dollars with multiple heirs. In this case, the parent considered some of the heirs “spendthrifts” meaning they either spent their money as fast as they got their hands on it, or they may have made poor decisions in the past and still had creditors out there seeking to enforce prior claims or debts. In cases such as this, naming direct beneficiaries would be the last thing the parent would want to do.
Thus, a trust was created for the spendthrift that allowed the Trustee to ensure that the heir was well cared for, but that very little money went to the heir outright. This protected the inheritance from the spendthrift themselves and from the creditors. Trusts are also a useful tool in leaving a bequest to a young person. Often, we spread out the distribution of the inheritance over a period of years as the young person ages and hopefully, matures in their financial decisions.
Finally, I was named Administrator on an estate where the decedent left no will. The conflict began before the administration of the estate as two heirs were fighting over which would be the Administrator. The court appointed me. There is very little to the estate and a lot of debt. Due to the lack of any planning on the decedent’s part, there may be little left to pass to her heirs after probate. So as you can see, the most difficult and complex probate estate of the three is where the monetary value of the estate is the least!
What can you do to avoid our third tale of woe? Sit down with a certified elder law attorney and discuss your unique circumstances and with the help of your attorney, and sometimes your CPA as well, you can put together a plan to ensure you have provided for the most efficient estate administration as possible. There is no one answer to every estate! Each family is different and each estate plan must be tailored to your unique circumstances. It usually begins with a review of your accounts that have beneficiaries named. We advise our clients to review their beneficiaries at least annually. I had a client last week that said she was shocked to see who her beneficiaries were because she had named them so long ago, that she had forgotten who she had named!
Once you have that information, then we review where these beneficiaries are in their life to determine how best to pass assets to them; should they receive the funds outright? should it be held in trust for a period of years? Then we ask, can we benefit from creating a trust now, or should the trust be created at the time of death as part of the will?
As you can see, there is more to estate planning than placing a child’s name on your account! For more information on how we can assist you, Contact Us!