In an interview with U.S. News & World Report, estate planning attorney, Gary Altman, Esq., shared a cautionary tale on the importance of having a will done now.
A 35 year old mother of two young boys whose husband recently died unexpectedly. He had not done any estate planning – not even a basic will. As such, his assets were allocated according to Maryland state law, whereas 50% goes to the spouse and 50% to the children. This exposed two huge problems for the family:
1. In the state of Maryland, minors cannot assume control of financial assets so the funds they inherited were placed in a court-controlled account. The mother had to go to court to ask to be appointed their guardian and now has to get permission from the courts to use the funds.
2. Making matters worse, the wife had been completely in the dark about their finances. She had never even paid the mortgage before. While the husband did have a $1M life insurance policy, that would not compensate for his $300,00 annual salary. In other words, they were under-insured. With ½ of his assets now tied up in the courts, and no income coming in, the wife is struggling to manage their finances.
Had the husband and wife come in before he died and done planning, he could have left all of his assets to the wife, appointed her their guardian and avoided the courts altogether. Furthermore, I would have let them know that they were underinsured so they could make an adjustment to their life insurance policy.
The bottom line is that it’s never too early to plan, but it can be too late!