Here is a true story highlighting the risks associated with failing to plan your estate. A happily married couple with two teenage children worked diligently and saved their earnings to the point that they had an estate worth roughly $4 million. They resided in San Rafael, California (an affluent area in Marin County). Despite having a fairly large estate, the married couple opted to procrastinate and failed to invest the time and resources in creating an estate plan. Like many couples, they thought to themselves, “We'll get around to planning our estate another time.” Unfortunately, that time never arrived.
The mother was diagnosed with cancer that had progressed to an advanced stage. Tragically, she passed away as a result. The father was seduced by a younger very attractive woman and subsequently remarried. His new wife carried a significant amount of debt to the new marriage. The debt was a byproduct of living above her means and spending lavishly on fancy vehicles, expensive jewelry, designer clothing, and glamorous purses.
The father, now besieged by his new spouse's debts and lavish spending habits, decides to sell their $4 million-dollar house in order to pay off his new spouse's significant personal debt, along with purchasing a new house in Beverly Hills, CA. Despite the major changes to both his personal life and financial health, the father continued to procrastinate and did not establish an estate plan.
Not long after the move and remarriage, the father suffered a heart attack and passed away. As a result, the new wife who came to marriage with significant debt inherits almost all of her new husband's assets. This is due to the fact that California is a community property state and has very generous statutory provisions geared to benefit a surviving spouse, regardless of how long they have been married to the decedent. You may be asking yourself, “what happened to the late father's two children?” Unfortunately, they will receive almost nothing from their deceased parents because neither had an estate plan. The new wife, focused on maximizing the returns from her brief marriage, opted to disinherit the children. As a result, both children were left out in the proverbial cold and are currently struggling financially.
As mentioned earlier, the situation described above is not a fantasy. It is a true story. In addition, these circumstances occur more common than you may think. Why? Because a far too many people put off estate planning and just tell themselves they will get around to it at a later date.
Let us imagine, for a moment, that the mother and father described above took the time to develop an estate plan. First, a portion of the mother's assets could have been put into an irrevocable trust. In addition, with the guidance of an experienced estate planning attorney, the father may have opted to purchase a life insurance policy and list his children as the designated beneficiaries (California's generous spousal laws would not impact a life insurance policy). The father may have also received the sound legal advice of requesting his new wife sign a prenuptial agreement that would ensure his two children receive a portion of his estate when he passed away.
Unfortunately, none of this planning took place and his children suffered as a result.
Do not make the same mistake. Contact The Geller Firm today to schedule an in-depth consultation with an experienced estate planning attorney. The Geller Firm is ready and able to assess your individual needs and answer all of your questions.