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TRUSTS AND ESTATES

     

Your Estate Plan:
Prepared or Unprepared

John McKindles

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.

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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 Jillís predeceased father).

Darth, dissatisfied that he did not get Jillís entire $400,000, contested the $90,000 Jill had left to Jack. Consequently, the administrator of Jillís 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:

  • Jillís intent (which is the critical issue in any estate planning/probate matter) and

  • Darthís claim that Jillís contributions to the plan were community property.

Jillís 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. Jackís 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 Jackís favor, i.e., that Jack should get the non-community portion of Jillís 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 courtís 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.