David M. Byrne is an attorney based in Fremont specializing in estate planning, small business, probate and trust administration, and Medicaid nursing home planning. He also serves on Fremont Area Community Foundation’s Professional Advisors Board. He has seen it all in his 31 years of practice. In honor of National Estate Planning Week, he answered some important questions and shared the good, the bad, and the horror stories of estate planning.
What factors contribute to the different results of estate planning?
David: “Estate planning” is exactly what the name says: planning for what happens to a person’s property upon death. Estate planning should also properly name a person to make business/financial actions and medical decisions on behalf of a person. If a person has a minor or disabled child, it is important to name guardians to care for the child should the parent die or become unable to do so. To put it simply, a successful result from estate planning is if a person’s desires actually occur.
What is an estate planning bad result?
David: A bad estate planning result is when the person’s desires are not met when the person becomes unable to handle their own business or medical affairs and/or upon their death. I have witnessed matters and relationships become very contentious after a person’s incompetency or death, which may result in unnecessary and costly legal proceedings. Those become the horror stories. Relationships are permanently destroyed, and estates are financially depleted by legal proceedings.
What are some horror stories?
David: I have lots of examples. People with minor children or disabled children usually have very specific people in mind to be the guardian, if they are unable to themselves. However, unless properly named in a last will and testament, the probate judge will have to select a guardian for the child, and the judge is limited by Michigan statute. Several family members may believe that they are the best to care for the child. So instead of stability and the family all working together in a time of crisis, there is uncertainty and legal proceedings to determine who the guardian will be.
Another example is if a person names all of their children as an owner and/or beneficiary on bank accounts, real estate, cars, retirement accounts, life insurance accounts, etc., there are all sorts of issues. Creditors of a child/beneficiary can take assets to satisfy the child/beneficiary’s debt. The person may be limited from managing, making decisions regarding, or selling their own property. I was involved in a case where the person added as a joint tenant to a person’s property refused to allow the actual owner to sell the property or transfer the property to someone else. There is no one person who can act to administer the “estate.” There is no money to pay the bills of the property and estate. Each joint owner will need to individually contribute to each expense. Each joint owner needs to agree to all sales, transactions, payments, etc. This creates lots of problems and expensive legal proceedings.
On the other hand, if only one child/beneficiary is named as the owner/beneficiary, that child/beneficiary may not follow the desires of the deceased person. There is no requirement for the child/beneficiary to account for their actions. This results in strained relationships and very possible litigation.
How does a person end up with a successful result and avoid a bad result or even worse, a horror story?
David: The key word in estate planning is “plan.” We all have heard the saying “failing to plan is planning to fail.” If a person doesn’t plan for their estate, then their desires are not likely to be met. The best way for a person to plan for their estate, the guardianship of any minor/disabled children, and for when the person is unable to act, is to work with an attorney experienced and specializing in estate planning. This attorney can walk the person through a series of questions to make sure the person has thought about the various scenarios and resulting desires for whatever happens in the future. If there are concerns regarding how family members and/or beneficiaries will act, the attorney can draft to limit or remove any potential issues. The attorney will then draft and review with the client the necessary documents to ensure that the client’s desires will be met. These documents include a will and/or living trust, durable power of attorney, patient advocate, etc. A well drafted estate plan that carefully details what the desires of a person are and directs the necessary actions is the best way to make sure that person’s desires are put into effect.
