If you recall from my last post, we were right at the point of determining whether Bill Sample’s estate plan worked. Bill, a father of 2 with lovely wife Mary, suffered a heart attack at the ripe old age of 45. How well did his estate plan work?
After 2 weeks in the hospital, Bill returns home to his family. However, he is coming home in a wheel chair and cannot feed, bathe or clothe himself. The family’s income has now been cut in half with increased expenses. Mary can’t afford the mortgage and puts the house on the market at a low price since she can’t wait out the bad market. Mary gets behind on the bills, is facing bankruptcy, and the kids are going through an emotional roller coaster. How well did Bill’s plan work? Did the documents address or explore any of these issues?
Let’s take it one step further and say that Bill died. He has an insurance policy worth $1million that gets paid directly to his wife. A year later the wife is driving down a local highway, distracted by the kids, and kills someone in a car accident. All the insurance proceeds are subject to her creditors and they are indeed taken. Could Bill have structured his plan so that the death benefits would have been protected from Mary’s creditors? Yes. What if she were to get remarried. Could Bill’s kids get disinherited unintentionally? Yes.
Moral of the Story:
I think it is a critical point to understand WHEN you know whether an estate plan works. Normally, you hire an attorney in Year 1 and receive some documents that you don’t understand and have no way of knowing that they will work. You get very little counseling. You then hide the documents somewhere like it is some mystery to be solved sometime in the future by your family in Year 10, 20, etc. Then, you go on with your life thinking you have done the right thing for your family. The problem is that those documents aren’t put into action immediately and there are no instant results for you to judge the value of what you paid for.
Be careful about the questions you ask when shopping for an estate planning attorney. Are you shopping for the lowest price documents or sound advice that will save your family from a lot of heart ache? Your call.