Many of us have thought about an estate plan and having some documents in place to help our family settle our estate after we pass away. Then life happens and we push that plan a little further down the list of “to dos.” Some of you have gone beyond thinking about it and have even had an appointment made to discuss your wishes with your estate planning attorney, but don’t get back to finalize and sign those estate documents. I’ve had multiple clients over the years ask “doesn’t it count that you know what I want to have happen even if I have not signed documents for my estate plan?”
Unfortunately, the answer is NO it does not create an enforceable estate plan when you have communicated your wishes to your estate plan attorney but have not signed any estate plan documents. To make a change enforceable, the execution requirements for creating a Will, Trust or an amendment to those documents must be met. Normally, that involves a signature, notarization and possibly witnesses.
Here are a couple of examples of good intentions that just did not work out. Client A met with her estate attorney to discuss updating her trust. She was considering removing her brother in-law as trustee and instead adding her sister as the trustee since her brother in-law had some declining health. She also wanted the distribution formula changed, since her son was now having alcohol issues. She decided to think a little more about the trustee change and before she was able to return to the attorney’s office to sign updated paperwork, she passed away unexpectedly. Her family only had the legal documents that appointed brother in-law as the trustee and trust language that provided for her son to receive a cash distribution outright from her trust.
Client B had a grandchild that had a disability and was receiving governmental benefits. When Client B set up his estate plan years ago, no one was sure what the grandchild’s future would look like nor if they would even be eligible for governmental benefits. Now that the grandchild was over the age of 18 and there was a determination of disability, they qualified for governmental benefits. Client B met with his estate attorney and he had asked the attorney to revise the distribution to the grandchild and direct it to a supplemental needs trust so that the governmental benefits would not be lost by an outright distribution to the grandchild. Client B’s cancer caused him to pass away sooner than expected and no changes were signed to his estate plan. The distribution to the grandchild caused a disruption in the governmental benefits. Certainly not what was intended.
The moral of the story, take that first step to meet with your estate planning attorney as soon as you know a plan needs to be made or a plan needs to be changed. We do not have that crystal ball to prevent all unintended consequences however, we can certainly be proactive to help minimize them as much as possible.
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