Saturday, August 14, 2010

The Will did Not Work

Horror Story

The Will Did Not Work

In a recent posting, I mentioned horror stories that family members sometimes face after the death of a loved one. Believe me, they are real.

Here’s one. The gentleman drafts a will on a computer program and says he leaves “everything to my son.” But he had two sons. After his wife divorced him, the second son was adopted by the stepfather. The man who died wanted everything to go to his first son; he had absolutely nothing to do with the second son. But under the law, because of the vague wording of the will, the second son was entitled to 50 percent.

That’s the law and because he didn’t plan for it… And this is really a horror story, because he drafts the will and then he kills himself. The first son should have gotten it all, but he had a chance to lose it all – except that the probate was handled by a good attorney. We were able to work around it.

The worst thing is to have no will at all. The reason that’s the worst thing is that you have to pay for probate. You have delays and you run the risk of the siblings arguing about who’s going to be in charge. This is especially problematic if it’s a dysfunctional family and there are disagreements about how the estate should be divided.

If you have no estate plan in place and your home is worth less than half a million dollars, the automatic probate cost is $26,000. If the home is worth $1 million, the cost your relatives will have to deal with is $46,000. But if you have set up a probate avoidance trust, the cost would be $3,000, maybe $5,000 at the most. It’s a big savings.

If the deceased person had set up a probate avoidance trust, within days after the death, the successor trustee can take over. You’re not fighting over who’s in charge. In addition to saving more than $20,000, you’re also making it easy for your family to get through an emotionally charged time.