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Prince and Estate Planning

As the whole world knows by now, Prince, or the Artist formerly known as Prince, didn't make a Will before his death.
Libby Banks and Client office talks prince

Avoiding Family Disputes Over Inheritance

In my past as a trial attorney, I handled family estate fights. Clients hired me to sort out the gigantic mess left by their loved one, and the inevitable and escalating disagreements about the estate. Other clients retained me to fight for a share of the estate when a sibling, stepparent or other relative took advantage of his position as executor of the estate. Time after time, clients said they would never speak to their siblings again, or lamented that the messy estate issues were breaking the family apart. I value family highly, and these cases broke my heart. I went into estate planning to help clients avoid these messy fights.

A proper estate plan can help by taking the fight out of your estate. When there’s no fight, it’s much easier for your loved ones to hold your memory dear and support and love each other. Here are a few of the mistakes I often see in my office.

Avoiding Common Mistakes When Making an Estate Plan

Not having a plan: This seems obvious, but it is the number one mistake made by thousands of people. If you don’t have a plan, don’t worry. The State of Arizona has one for you. The legislature put it together for us to follow, but it may not be what you want. My best advice is to put a plan in place now. If you have children, you need a plan. If you own a home, you need a plan. It might be a simple plan, but that simple plan can save your family heartache and money when you’re gone – which may be sooner than you expect.

Not having a plan leaves your heirs to fight about who’s in charge, who’s going to front attorney’s fees and funeral expenses and who’s going to do the work of wrapping up your estate. A simple plan may be all you need, and that plan could make sure your children still speak to each other when the work on your estate is complete.

Putting a do-it-yourself plan in place or using a non-expert for your plan: Sometimes we need to call in the experts. Here’s my personal example. My husband is a great handyman. When we updated our kitchen, he replaced the appliances himself. Everything went great until we got to the new vent hood. I stood across the kitchen watching him, then moved away for a better view. As he connected the wiring, suddenly the vent’s light bulbs burst and the fan spun across the room, hitting the cabinet where I had been standing! “Honey,” I said. “Should I call an electrician?”

We were lucky. No one got electrocuted or hurt. But we learned that there are times when it’s best to call an expert. The same is true for estate planning. If you make a mistake, it will be too late when your family finds out. They may end up with a complicated mess and a family fight.

Using a non-expert can cause problems as well. Non-experts are often really smart people, but they aren’t estate planning attorneys. They don’t have the education and the attention to language that estate planners have. I have sorted out many a mess caused by a non-expert’s plan.

Keeping your “older-than-the-hills” estate plan:  Did you put a Will together when your children were born? Good for you! But if it’s been a few years, it may be time to revisit your plan. If your children are still minors, but your assets have grown substantially, you may want to rethink how you are leaving your assets to them. If your children now have their own children, you need an update desperately. If you don’t know whether there are changes in the laws governing your estate, you need a legal review of the plan to be sure.

I recommend to my clients that they review their plan with me every three years. That way, if the laws have changed, I can let them know how it affects them. If their situation has changed, I can advise whether their plan needs an update because of the new circumstances.

An older estate plan can cause the same kinds of problems as no plan. If your plan doesn’t address your current circumstances – both your family situation and your asset situation – a fight over what should be done may well be on the horizon.

Putting a child on your account or on the title to your house as a joint owner: Many people try to avoid probate by adding a child to their bank account or home. Sometimes, they are simply trying to be sure that someone is able to pay the bills if they are unable to manage their affairs. The problem is that you have now potentially given ownership of the account or home to your child. The assets are yours, but if your child develops financial problems, try telling that to his or her creditors! All they see is the child’s name on your account.

Also, if you have more than one child, what happens if the child on the account won’t share with his siblings once you are gone? You may not think your child would do this, but I see it all the time. The child on the account is generally the one who spent more time caring for the elderly parent, and often feels entitled to take the money for himself. If this happens, your other children have little or no legal recourse. This leads to resentment of that child and a rift in the family that may never be repaired.

A better choice is to put your assets in a revocable living trust. Your trusted child can be a co-trustee with you, enabling them to assist you with managing your assets, but keeping the assets all yours. As a co-trustee, your child has a fiduciary duty to use the funds according to your wishes and the terms of the trust. When you put your trust in place, carefully select your trustee because another mistake I see is:

Picking the Wrong Trustee and/or Failing to Educate your Trustee: When picking your trustee, keep in mind the many duties your trustee will have. Does the trustee you are picking have the time and financial savvy to act as trustee? Will that trustee be open with the beneficiaries (who may be her siblings) about what is going on with the Trust? Do they know what to do? Making sure your trustee has a good understanding of the work that will be required of him or her, and making sure they will keep the other beneficiaries updated on a regular basis is crucial. Many hard feelings and fights could be minimized or avoided by a regular report to the other beneficiaries.

A proper estate plan can help by taking the fight out of your estate. When there’s no fight, it’s much easier for your loved ones to hold your memory dear and support and love each other.

For more Phoenix estate planning information, schedule your complimentary initial consultation. Call me at (602)375-6752, email libby@libbybanks.com or use our scheduling app on my website:  Libbybanks.com.

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