If you’re like most people, you likely think estate planning is just one more task to check off of your life’s endless “to-do” list. You may shop around and find a lawyer to create planning documents for you, or you might try creating your own DIY plan using online documents. Then, you’ll put those documents into a drawer, mentally check estate planning off your to-do list and forget about them. The problem is, estate planning is not a one-and-done type of deal. In fact, if it’s not regularly updated when your assets, family situation, and the laws change, your plan will be worthless. What’s more, failing to update your plan can create its own set of problems that can leave your family worse off than if you’d never created a plan at all.
The following true story illustrates the consequences of not updating your plan, and it happened to the founder and CEO of New Law Business Model, Ali Katz. Indeed, this experience was one of the leading catalysts for her to create the new, family-centered model of estate planning we use with all of our clients.
A game-changing realization
When Ali was in law school, her father-in-law died. He’d done his estate planning—or at least thought he had. He paid a Florida law firm roughly $3000 to prepare an estate plan for him, so his family wouldn’t be stuck dealing with the hassles and expense of probate court or drawn into needless conflict with his ex-wife. And yet, after his death, that’s exactly what did happen. His family was forced to go to court in order to claim assets that were supposed to pass directly to them. And on top of that, they had to deal with his ex-wife and her attorneys in the process. Ali couldn’t understand it. If her father-in-law paid $3,000 for an estate plan, why were his loved ones dealing with the court and his ex-wife? It turned out that not only had his planning documents not been updated, but his assets were not even properly titled.
Ali’s father-in-law created a trust, so that when he died, his assets would pass directly to his family, and they wouldn’t have to endure probate. But some of his assets had never been transferred into the name of his trust from the beginning. And since there was no updated inventory of his assets, there was no way for his family to even confirm everything he had when he died. To this day, one of his accounts is still stuck in the Florida Department of Unclaimed Property.
Ali thought for sure this must be malpractice. But after working for one of the best law firms in the country and interviewing other top estate-planning lawyers across the country, she confirmed what happened to her father-in-law wasn’t malpractice at all. In fact, it was common practice.
This inspired Ali to take action. When she started her own law firm, she did so with the intention and commitment that she would ensure her clients’ plans would work when their families needed it and create a service model built around that mission.
Will your plan work when your family needs it?
We hear similar stories from our clients all the time. In fact, outside of not creating any plan at all, one of the most common planning mistakes we encounter is when we get called by the loved ones of someone who has become incapacitated or died with a plan that no longer works. Yet by that point, it’s too late, and the loved ones left behind are forced to deal with the aftermath.
We recommend you review your plan annually to make sure it’s up to date, and immediately amend your plan following events like divorce, deaths, births, and inheritances.
It’s important to make sure your assets are properly titled when you initially create your trust, and then make sure that any new assets you acquire over the course of your life are inventoried and properly funded to your trust. This will keep your assets from being lost, as well as prevent your family from being inadvertently forced into court because your plan was never fully completed.
This article is a complimentary educational service by Deanny Lungu-Underwood, Esq. Lungu Law Group, A Professional Corporation.