A Cautionary Tale – Do Not Put Off Estate Planning


The biggest hurdle facing estate planners is proscrationation.  No one expects anything bad to happen.  Most figure they can wait one more day, one more week, one more month to do estate planning.  Some opt to buy that flat screen TV or go on another vacation rather than to do estate planning.  In fairness, most of the time waiting or putting off estate planning is ok, because nothing happens.  HOWEVER, what if the unthinkable happens, whether it be a death, disability or lawsuit.  Then what? 
 
That is what happened recently to a client of mine.  They were referred by their financial advisor late last year.  They called in December and made an appointment for early January, which they canceled due to some conflict.  They eventually came in for their initial consultation in late February.  I was advised that the wife had cancer and her progronosis was not good.  We immediately drafted their estate planning documents and then tried to get them to come in to sign.  They made an appointment to sign, but then canceled it due to a doctor’s meeting.  We tried again.  Finally, we received a call that she was in the hospital.  We suggested that we go to the hospital to get the documents signed, but by then it was too late, she was not awake.

Unfortunately, she died last week.  The bottom line, no estate tax planning was done, and upon he husband’s death, the children will pay an additional $200,000 of Maryland estate taxes and if Federal estate taxes are restored in 2011, there could be an expected 700,000 of Federal estate taxes when the husband dies.  Moreover, if the husband gets remarried, it is possible that his new wife and family will actually inherit all of the assets.  Or, if he gets sued or goes into a nursing home, all of the assets will be subject to the creditor or nursing home.
 
If they had been able to do the estate planning that was recommended, all of the estate taxes would have been saved, the assets would stay in the family’s blood lines, and the assets would be protected from creditors, nursing homes, etc. 
 
I know how hard it is to plan.  But it is necessary and important to plan now.  Mostly because no one ever knows when it will be necessary and if it is necessary, not planning is a complete and total disaster waiting to happen.

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