Best Intentions – Paving Material for a Bad Road
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They say that the road to destruction is paved with good intentions. The saying fits procrastinators that intend to make or update estate plans involving turbulent families, but never get around to making updated plans. An estate plan procrastinator can create even more destruction by sharing estate plan intentions with family members without following through with the intentions.
Result of No Planning
In most states, if a deceased person dies as the sole owner of an asset without leaving a will, the asset ownership passes to the person’s surviving spouse and children. Some states also grant additional asset distribution rights to spouses and minor children above and beyond their primary distribution shares (for example, $25,000 for a surviving spouse or minor children Indiana; and $20,000 for surviving spouse and $10,000 for each minor child or adult dependent child in Illinois). Surviving spouses often express surprise and frustration when they have to share their deceased spouses’ assets with the decedents’ children, and vice versa, especially in second marriages.
Special Estate Plan Vulnerabilities
In most states, a surviving spouse has the right to “renounce” the deceased spouse’s last will and testament and take a share of the estate even if the will deliberately left nothing for the surviving spouse. Furthermore, those states that provide an extra monetary allowances for a surviving spouse or minor children provide those allowances in addition to the surviving spouse’s right to override the deceased spouse’s will. These rights allow the surviving spouse in a second marriage to take a large share of assets that the deceased spouse may have intended to pass to his or her own children. There are some strategies to minimize this effect, but the best way for a person to ensure that assets pass to his or her children in a second marriage is to make a prenuptial agreement before entering into the second marriage. Understandably, these factors often create fierce tensions between surviving spouses and their disappointed stepchildren.
Sloppy Co-Ownership and Beneficiary Arrangements
People often want to authorize family members to help them manage bank accounts and other assets. A power of attorney is the smartest way to give that authorization to family members. Unfortunately, it is all too common for a person to add one family member’s name to accounts or make that person the sole beneficiary with the intention that that family member will divide the assets equally among the other family members after the person’s death. In countless cases, we have heard people complain that their parents intended to treat all family members equally, but the assets passed to that one person named on joint accounts for check writing purposes or as the sole beneficiary.
Good Follow-Through Beats Best Intentions
Life is full of surprises. There is no better time to plan for tomorrow than today because surprises tend to interfere with tomorrow. Once a person decides what he or she wants to do, the person should take action before illness or injury makes the action impossible.
Jeff R. Hawkins and Jennifer J. Hawkins are Trust & Estate Specialty Board Certified Indiana Trust & Estate Lawyers and active members of the Indiana State Bar Association and National Academy of Elder Law Attorneys. Both lawyers are admitted to practice law in Indiana, and Jeff Hawkins is admitted to practice law in Illinois. Jeff is also a registered civil mediator, a Fellow of the American College of Trust and Estate Counsel and the Indiana Bar Foundation; a member of the Illinois State Bar Association and the Indiana Association of Mediators; and he was the 2014-15 President of the Indiana State Bar Association.
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