Have you ever wondered what happens when someone passes away without a will or a living trust? Essentially, the court system has a set formula of how assets will be divided. At first, this may not sound so bad. However, every family situation is different and very few are well served by the court’s estate distributions.
Just recently I met with a couple whose family situation clearly highlights the problem with not creating a plan that is customized to your specific needs. Last week, David and Jillian came to meet with me in our Arrowhead office (all names and location information have been changed to maintain privacy). They have been happily married for many years and have raised three children together; two sons and a daughter.
Jillian had her daughter, Alissa, several years before meeting David. In fact, the circumstances of the birth and rearing of her daughter before she met David were very sad. Her courage and extraordinary efforts to care for her little girl and to do right in her position were exemplary. Jillian is a clear example of the love and sacrifice that a parent will make for their child.
Unfortunately, despite the strong history between Jillian and her daughter, Alissa has twice “quit” the family. During these times, Alissa maintains no contact with her family and ignores inquiries and contact attempts from her mother and stepfather. This behavior has caused a great deal of heartache, which Jillian no longer wants to face. Jillian and David have decided to create an estate plan to ensure that the assets they have worked so hard to acquire and protect are left to their supportive and loving sons instead of an ungrateful and unresponsive daughter.
The couple has a great estate planning need. David and Jillian want the estate to first pass to the surviving spouse to ensure they have sufficient funds during the remainder of their life. After the death of the second spouse, they want the funds to be distributed only to the sons with no portion of the estate going to the daughter. However, without a living trust, the dictates of the state will force a very different scenario. In fact, if Jilian dies first, the estate will be divided in half, with half going to David and the other half split immediately among the three children. Then, after the surviving spouse passes away, the remainder of the estate will also be divided among all of the children. Not only will the state’s predetermined “plan” not meet the couple’s wishes, it will also cause a great deal of heartache and grief for them and their sons.
This is only one example of many various considerations that must not be overlooked if you want to leave your assets and legacy to those you intend.
Contributed by MH Mesa, Scottsdale and Phoenix Estate Planning Attorney and Partner Theron M Hall, Jr
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This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.