SAFEGUARDING YOUR ESTATE PLAN AGAINST THREE WORST-CASE SCENARIOS
Here are three examples of worst-case scenarios with a descriptive demonstration of how a carefully crafted plan can address issues, from the predictable to the total surprise.
Scenario One: Family Members Battle One Another
You don’t want the people you care about most to get into a fight over your estate. Disputes over who should get what, how to interpret unclear or inconsistent instructions from you, or how loved ones should manage your affairs are common.
Lawsuits between family members can drain your estate and cause a permanent break in family relations. Infighting can lead to less obvious problems as well. For example, your daughter is named as executor, but she holds a grudge against your son. Your daughter cannot rewrite your will to leave him out. However, she could drag her feet with the administration, interpret the will unfairly, privileging herself over your son, or engage in other manoeuvres. Your son would have to hire a lawyer and potentially get involved in a legal battle. This is a bad outcome for everyone.
To prevent such scenarios, consider using an impartial (e.g. third party) trustee or executor. Moreover, speak with a qualified estate planning attorney to prepare for potential future conflicts among family members.
Scenario Two: Both Spouses Die Simultaneously
Many estate plans transfer assets to a surviving spouse, but what happens if both spouses die at or near the same time? This situation may be even more complicated if both spouses have separately owned assets or if the size of the estate is significant. In that case, asset distribution may depend on who predeceased whom and other factors. There are, however, ways to address this in an estate plan making it easier for your family to understand your intent, including:
- A simultaneous death clause that automatically names one spouse as the first to die;
- A survivorship deferral provision, delaying transfer of assets to a surviving spouse, thus preventing double probate and estate taxes; and
- A common disaster clause that names a final beneficiary in the event all primary beneficiaries die at once.
Scenario Three: Passing Away Overseas
Expatriates may need particular care in estate planning. If a death occurs outside the U.S., foreign laws may conflict with provisions of an American-made estate plan. Thus a plan may need to be reviewed both for the US and other nations’ laws. If you intend to live abroad for an extended period or own property in another country, it may be smart to draw up a second will consistent with that country’s laws, too. The starting point is completing your estate planning (will, trust, and other documents) here in the United States.
If you have concerns as to whether your current estate plan provides adequate safeguards against the unexpected or anything else you might be worried about, we are here to help. Contact our office for an appointment.