Everyone Dies, but Not Everyone Has a Living Will

The Consequences of Having No Will Can Destroy Family and Friendships

A Stepchild’s Story: A client recently came to her attorney asking what she could do to protect the estate of her stepmother who had recently passed away. Her stepmother had raised her and been her mom for more than 40 years. In turn, the client had cared for her mother during the last 10 years of her life when she was very ill. Now that her mom had passed, her stepsister and blood daughter of her mother had cut her off from family communications and any inheritance. This is the same stepsister who had refused to help her ailing mother in her last years and had all but disappeared from her mom’s life, only to reappear when her mother had passed. In some states like Arizona, one must be a blood child or legally adopted to be considered an heir. If the mother had even a simple will drafted that named her beloved child—who was never her child legally, but who was her child in every sense of the word—her daughter would have avoided the harsh reality that she had zero options once her mother passed away.

This scenario is particularly relevant because in the U.S. today, many families are blended. While there is normally no chance of formal adoption because the natural parents are still involved, the only other way to connect yourself to your stepchild and vice versa is through estate-planning documents and beneficiary designations. If you have a blended family, or even if there is someone in your life you dearly care for but they are not a blood relative, you must have a plan drafted to specifically name that individual.

A Beneficiary’s Story: A man was operating a limousine business for about two years. The woman who had purchased the limos and was allowing this man to use them for business purposes had passed away unexpectedly. While she had left a will with instructions to transfer all of the limos into this man’s name, it was done improperly. The loans on these vehicles had not been paid off, and in order to keep the limos, he would have to come up with the balance of the loan. Within weeks, this man could no longer operate his business, and had to forfeit the vehicles he had been using and cancel all of his bookings because he didn’t have the income to even apply for a loan for a replacement limo. All of this could have been easily avoided if the woman had created an estate plan. One important item to note: When a vehicle is gifted in a will or a trust, the instructions must include the estate will pay for the debt attached to the car. Otherwise, even with a properly drafted estate plan, the beneficiary will be responsible for the loan.

A Cousin’s Story: A young woman experienced the untimely death of her 21-year-old cousin who was like a brother to her. The 21 year old had been depressed after losing his mother and passed away without any children of his own and his father had been estranged for decades. The 21 year old’s estate consisted of a one-bedroom apartment, some personal belongings and a monetary inheritance from the life insurance his mother had in place. In Arizona, when someone passes away who does not have issue, or children, the inheritance goes up to the parents. Since his mother was already deceased, that meant his father, the person whom he had zero relationship with, would get everything. At this point, the young woman had a difficult decision to make. Would she probate the estate and let the funds go to the father, the man whom she knew her cousin would not want this money to go? Or would she do nothing and eventually let the state take the money? Either way, she would be left with nothing.

This heartbreaking tale could have been avoided if the 21 year old had a will. He could have named his cousin as the beneficiary and effectively disinherited his estranged father. The lesson is two-fold in this case. Not only is it important to have a plan created or updated when you come into an inheritance, no matter the size, it’s also important for every adult to have a plan whether they are 20 or 80. It isn’t the everyday occurrence you create an estate plan for. It is the exceptions and circumstances that are unforeseeable we plan for. Don’t wait until tragedy shakes your world to have a plan in place—create one now. Our legacy, our wishes and our protections for our loved ones are only as good as what we have in place before something happens. Watch the interview with Elizabeth Westby on real life stories of people who failed to plan.

http://rightonthemoneyshow.com/everyone-dies-but-not-everyone-has-a-living-will-elizabeth-westby/