• Shawna Murray, Attorney

Three Scenarios to Consider So Your Estate Plan is Not Unraveled

Most would probably agree that one of the top reasons for preparing a well-crafted estate plan is to prevent your estate from going into probate. Avoiding probate could save your estate tens of thousands of dollars. When you have spent the time and money to prepare a proper estate plan, you may want to consider these worst-case scenarios to avoid derailing the plan.

#1: You Pass Away Abroad

While an estate plan drafted in the United States is going to be valid even if you move to another state, the situation is not the same if you move outside of the United States. If you find yourself living abroad for some or all of the year, you should take care to make provisions for your estate according to the local laws of the country where you are residing, as a supplement to the estate plan you have here. The laws of the country where you reside when you die are going to control the distribution of at least some of your estate.

So, if you pass away while living in another country, there can be foreign laws that dictate how your personal property is distributed and those laws can be in conflict with your American estate plan. For this reason, consulting with a local lawyer in the other country is wise. The estate plan that you have in the United States will work for property here; for example, your house in California will be distributed according to the United States estate plan you have. Still, having all of your bases covered will make life for your survivors much easier in this difficult time.

#2: Family Members Fight About Nothing and Everything

Litigation between surviving family members is all too common in probate court. Many of them are fighting over issues they have with a trust. The people you love and cherish the most can get into contentious lawsuits over many different things; for example, who gets what assets or how assets are managed or how to interpret vague instructions. Families can call apart if they end up in court like this.

Lawsuits concerning the estate plan can drain considerable sums of cash to interpret vague instructions or defend the successor trustee’s management. For example, parents often pick one adult child to manage/administer the trust. But what happens if that child also happens to have deep resentment against one of their siblings. The child in charge may needlessly drag-out the administration of the estate, distribute some assets in a manner that favors some siblings over another, or engage in some other shenanigans. If one or more siblings take issue with the way the estate is being administered, they can hire a lawyer and file a lawsuit.

You probably know your children best but you may want to consider naming an impartial trustee to administer your estate. Your consultations with your estate planning attorney can be helpful to prepare for this potential scenario and hopefully avoid them.

#3: Both Spouses Die At or Around the Same Time

Generally, most couples will decide that they want to leave the estate to the surviving spouse. That makes sense and works great nearly all of the time. But what happens if the couple dies simultaneously or very near in time? The distribution of assets may not go as you intended. Carefully planned tax savings might not work as planned. If it is unclear which spouse died first, the couple’s heirs or beneficiaries will have to file a petition in probate court to ask the court to determine who passed away first. That will take time and money.

However, if the estate plan’s trust has a simultaneous death clause, then the couple can name in advance who would be the first to die in case of simultaneous death. With a survivorship deferral provision, the transfer of assets is delayed to clearly determine who will inherit. If one or more of your contingent beneficiaries also passed away around the same time as the couple (God-forbid), they might not have an estate plan and the result is that assets from your estate end up in probate because that beneficiary passed away without a will or trust. Including a catch-all provision for who inherits in the very worst-case scenario can help keep the estate out of probate.

Your starting point should be to have an estate plan drafted to your specific needs. If you need help preparing one, please contact Shawna Murray Law at 949-416-3575.

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