This Week From
Estate Plans Can Yield the Unintended Outcome – Be Careful!
Bill and Rita have passed away. They each have two children from prior marriages and the plan was when they died, their estate would be divided among all four kids equally. They met with an attorney and did an estate plan believing they had addressed the issue. Bill’s trust left his estate to Rita, with a provision that if she does not survive him, all of his assets are divided among the four children and Rita’s trust had the same provision for Bill. Bill died first.
Shortly thereafter, Rita had a fight with Bill’s two sons and changes her trust to leave the entire estate to her two children. Rita dies, Bill’s kids get how much? Did you say, “Zilch?” because that is the answer. This outcome can occur with poor planning. If Bill did not have a will or trust upon his death – then Rita would have inherited the first $150,000 plus ½ of Bill’s estate – leaving his kids the remainder. That result would have been better than what actually occurred – but what should have occurred is what Bill and Rita intended. The estate plan was defective because upon the death of Bill, the first spouse, the funds needed to remain in trust – so that the income could go to support Rita with a power to invade the principal for her support – but the plan should not have left the assets outright to her. When families have children from prior marriages – this issue is paramount. But that’s not the only situation. The proper plan has to ask and answer these questions: What if my spouse remarries? What if my spouse runs into debt issues after I pass? What if my children inherit money but have creditor issues? Proper planning is critical.
Have a great week,
THAV GROSS PC
30150 Telegraph, Ste 444
Bingham Farms, Michigan 48025-4519
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