Issue 8.11
Costly mistakes can be made when doing estate planning. In most cases, mistakes are made by well-intentioned people who failed to take advantage of opportunities to accumulate wealth, shelter assets from estate tax, and protect estates for future generations. Some common estate-planning mistakes are listed here. By exercising care now, you can save a fortune later.
1. Neglecting items of sentimental value
Billy left a portion of his estate to his children in equal shares, and some to the stepmother of his adult children. Unfortunately, the will was silent as to distribution of his personal property, which included numerous paintings of purely sentimental value. The stepmother felt she was entitled to the paintings. The personal representative, however, distributed the paintings among the adult children. The stepmother hired an attorney to fight for the paintings, which were ultimately divided evenly among the four beneficiaries. But the legal fees far exceeded the value of the paintings, family relations were strained, and in the end nobody was happy.
Solution: Some people wrongly believe that there is no place in a will for personal property that does not have significant monetary value. If you are leaving items of personal property, whether of actual or sentimental value, clearly state in your will how you want them to be distributed, or include them in the written list of specific gifts of personal property attached to your will.
2. Failing to secure the documents
Patty’s Uncle Bob, with whom she had a close relationship, died. Bob had prepared a will but it was nowhere to be found. Patty said Uncle Bob had promised her a substantial inheritance, but because the will was missing and she was not related to him by blood, the Court gave the entire estate to nieces and nephews who lived overseas — and who Bob had never met!
Solution: Make copies of your documents and store them in a safe place. Put the original in a bank safety deposit box; even if the key is lost and the whereabouts of the box is unknown, it can always be located by a vault box search. Give copies to your personal representative and attorney. And keep a copy in a safe place at home.
3. Keeping secrets
An elderly woman named Gwen died and left $40,000 to her devoted caretaker. The other beneficiaries of Gwen’s large estate included nephews and nieces who were jealous of the caretaker’s relationship with their aunt. When the will was read, they expressed anger that Gwen had left money to her caretaker. They argued that the caretaker had exercised undue influence over Gwen, and therefore was not entitled to the bequest. Although the bequest was upheld in court, the challenge was costly, caused delays, and upset Gwen’s devoted caretaker.
Solution: Make your feelings known to your personal representative and beneficiaries — preferably before you die — about which people you wish to leave bequests to. If you think this may cause conflict, explain in a letter why you feel the way you do; send the letter to all relevant beneficiaries and attach a copy of it to your will. Ideally, you should resolve potential disagreements and quell hostilities (as much as possible) while you are still alive.
Jeffery J. McKenna is a local attorney serving clients in Utah, Arizona and Nevada. He is a shareholder at the law firm of Barney, McKenna, and Olmstead with offices in St. George and Mesquite. If you have questions you would like addressed in these articles, you can contact him at 435 628-1711 or jmckenna@barney-mckenna.com.