WHY PROCRASTINATE? BELIEVE IT OR NOT, YOU WILL DIE. DON’T TRY TO CONTROL IT.
- November 18, 2014
- Blog, News & Events
People desire control. What they eat; whom they date; their clothes; and where they live. Hell, people even attempt to control what others think about them (something that is really out of one’s control). The list of potential examples is boundless.
After handling over a thousand different legal projects, we are starting to think that people are so vain that they actually think that they can “control” death and disability. In turn, unfortunately, they are setting themselves—and more importantly—their family up for guaranteed failure. If they are self-employed, they are also exposing their business and employees to economic hardship and managerial chaos.
Frankly, it drives us crazy to clean up estate planning messes. Here are the most common causes of estate planning quagmires that our firm sees:
1.Using an online do-it-yourself website because it’s “cheaper”;
2.Bargain shopping for legal services or using a non-licensed individual; and
3.Sticking one’s head in the sand and ignoring the serious reality that failing to have a fully updated estate plan in place is a grave mistake.
*** For some reading pleasure and to add some Hollywood/celebrity sexiness to the topic of estate planning, Google the following estates (it will provide some interesting context to this topic):
a. Estate of Jerry Garcia;
b. Estate of Joey Bishop;
c. Estate of Sammy Davis Jr.; and
d. Estate of Howard Hughes.
For purposes of this article, we will further examine example number three.
PULL THAT HEAD OUT OF THE SAND!
First, we must emphasize the beautiful reality that people DO control their own estate planning destiny. If this isn’t music to your potentially stubborn ears, it is definitely music to the ears of your family and business employees/colleagues. If you choose to be obstinate, they are the ones forced to deal with the aftermath of your slothful attitude towards a very monumental aspect of one’s life.
Think about it: the value of your children is financially unquantifiable and your business is most likely your most valuable asset. Furthermore, if you are a small business owner, your team is family to you too. Far too often we, as attorneys, see people not take a diligent approach towards mitigating the legal and financial risk that you expose your family and business (and customers!) to without an updated estate plan.
The following is a non-exhaustive list of what we have seen when people don’t have a proper estate plan in place (believe us, we’ve seen a lot more). Some of these messes have become extremely expensive and emotionally draining to rectify. As mentioned earlier in this article, cleaning up messes is not fun work for us. It is expensive, because it is time consuming and your beneficiaries are not happy seeing their money spent on legal and accounting bills.
Here are some horror stories for your reading pleasure:
1.A business is unable to conduct its banking activities, bills cannot be paid, and payroll obligations cannot be met since no proper business succession plan has been implemented outlining which individuals will step in the shoes of the principal.
2.Commercial and residential loans are called due by a financial institution as a result of the very common “due-on-sale” clause contained in almost all types of loans.
3.Children, grandchildren, stepchildren, a spouse, and other important family members are left out of the estate plan if a previous estate plan exists, but has not been updated. After someone has passed away, it doesn’t matter what their intent was—unless we have properly drafted documents to prove this intent.
4.Life insurance documents list an improper beneficiary.
5.Pay-on-death retirement accounts list the improper beneficiary.
6.There is no business succession in place for the other shareholders; as a result, they become business partners with a spouse (this is not something they probably want).
7.There is no life insurance in place. As a result, the family and business lack liquidity to manage obligations.
8.Tax exposure to the beneficiaries because the decedent did not work with their CPA and attorney on proper tax mitigation measures.
9.The old estate plan reflects the legalities of a tax code that is severely out-of-date. Thus, the trust potentially requires steps that no longer have to be taken due to the tax exemptions being increased recently.
10.Assets are left outside of trust thereby exposing a large portion of the estate to probate—this is expensive, stressful, and very time consuming. The only party who benefits is the attorney (you can avoid ALL of this).
In closing, our firm simply offers advice and strategic counsel to mitigate risk for you, your family, and your business. We don’t “push” products. Rather, we educate. The ball is in your court to take the necessary steps to avoid estate planning Armageddon.
If you are alive and mentally coherent following your reading of this article, you do have CONTROL of your estate planning destiny. But this control is only temporary. Remember…you cannot control death and disability. Be prepared for this harsh reality. At a minimum, do so for your family and business.