What is estate planning

What Is Estate Planning?

What Is Estate Planning?

Estate planning is ensuring your surviving spouse or significant other, as well as your children, receive what you want them to when you die. Most clients never think about the possibility of “unintentional disinheritance” when they do their estate planning, though. Perhaps they’re not aware of this real danger. Also, many estate planning attorneys never bring this up for their clients to consider, nor do they offer easily implemented solutions. Too often the focus is only on avoiding estate taxes and probate.

The Perils of the I Love You Estate

How can “unintentional disinheritance” occur? Let me use an example: Assume Tony and his wife Marge have been married for 38 years. They have raised four children, all of whom are now independent adults. Let’s say Tony and Marge own all their property jointly (as many couples do), or if they have a will or trust, it is the typical “I love you” plan that transfers all of their property to the other spouse in an outright distribution if one of them dies. Now let’s say Tony dies first, leaving all his property to his wife. Later she decides to remarry, and she and her new husband either own everything jointly or have their own “I love you” wills or trusts. If the new husband dies first, then Marge can leave everything left in her estate in her will or trust to their children, including the part that Tony left to Marge.

But what happens if instead Marge dies first? Then all her property, including all of that which she and Tony accumulated together during their lives together, goes to her new husband. What do you think the chances are that the new husband (who has his own children from a prior marriage) will leave his estate to Tony and Marge’s grown children when he dies? Most clients asked this question answer “zero chance!” Our children are unintentionally disinherited.

Fortunately, a little advance planning can prevent this from happening. The estate planning attorney can draft a trust which provides that if either the husband or wife dies first, all of their property goes into a “family trust” and possibly also a “marital trust” which the survivor can access during their lifetime. This trust also has the benefit of providing protection from creditors and predators. If the surviving spouse (in this illustration Marge) later remarries and dies first, the remainder of the family and marital trust will go Tony and Marge’s children, not the new husband (and ultimately his family). Hence, no “unintentional disinheritance.”

What is estate planning? Planning for the future of those who remain after you pass. Let us know how we can help you make sure the beneficiaries you choose receive their intentional inheritance.

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