This is National Estate Planning Awareness Week. As an estate planning attorney, it’s my job every day to educate my community about issues (bad things) they may face in the future with respect to their assets, family, debt and more, if they do not get their plan in writing.
The very best way to learn anything is to learn examples, especially about what could go wrong. So this week, let’s go over some contingencies to highlight why you should start thinking about your own plan.
Let’s take the example of Susan and Bob. In their 30s, they have two kids and both work full-time. They have about $400k together in their retirement funds, own a house, have a checking account and two cars. They are not wealthy in their minds, but they work hard. They’ve had to sacrifice some family dinners to work, but they did it for the greater good—to provide for their kids one day.
Tragically, Susan dies in a car accident. They had no estate planning. The house remains in Bob’s name as they both owned together as a married couple. The custody of the kids of course stays with Bob. Susan listed Bob as the beneficiary of all of her accounts, trusting that he would always do what is best for the kids.
After Susan’s untimely death, Bob suffers greatly. He cannot function and cannot keep up with the kids. He can hardly cook dinner. The house is a mess and he is suffering.
With Susan’s death, Bob became the most eligible bachelor on the street. Tabatha is short on cash and has already tried several extramarital affairs, to no avail. So, she puts on her preppy dress and heads over with a baked casserole to Bob’s house. Bob is thrilled and so thankful for her kindness. How sweet of Tabatha! He knows that there are a few rumors about her, but no one apparently has seen her heart of gold.
Tabatha brings several more meals over and even offers to help with the kids. Bob sure misses having a partnership with another. Tabatha cringes at the tacky home decorations and rolls her eyes at the moody children. They need some manners! Tabatha treats her dog, Coco, much better.
Tabatha’s plan is to get married to Bob, buy tons of doggie treats and outfits for Coco, and plan an expensive vacation. She knows that Susan left a lot of life insurance too! Tabatha has finally made it, she just needs to play her cards right.
Is this what Susan would have wanted for her kids? She worked hard her entire career so her kids would have some options, more than she ever had. She just didn’t know Bob would have been so distraught, that he would have been a target for predator women, and her kids would have to not only deal with a nasty stepmom, but they wouldn’t have the benefit of the money Susan left for them.
Susan, on Estate Planning
Susan and Bob created a Revocable Living Trust, with a sub-trust for the children. Upon Susan’s death, 70% of all of her assets went into the children’s trust. Bob received the remaining funds that he had complete control over. Tabatha still came into the picture but she was disgusted to learn that Bob didn’t have the spending cash she expected. As they had created the children’s trust and with the loss of Susan’s income, Bob saved his money carefully and couldn’t afford to take Tabatha out for expensive dinners. She lost interest quickly realizing he was a dead-end.
This is just one option! With estate planning, Susan had a lot of other options too—thousands of them. Bob and Susan had a lot of freedom to decide the terms ahead of time with the benefit of estate planning. Sorry Tabatha!
As estate planners, we always think “what could possibly go wrong.” That is how you plan for any contingency to make sure your family is always protected. Are you protected from the Tabatha’s on your street?
Lori Vella is an Estate Planning and Business Attorney. She works virtually throughout Florida and New York, but has her home office in Tampa, Florida. She is mom to a little boy which ignited the passion for helping other families. She and her son enjoy car rides, playgrounds and taking mini-adventures. They also have an organic garden that surprisingly yields vegetables. Lori considers herself well-versed in Seinfeld and welcomes any trivia!
Disclaimer: The Law Office of Lori Vella’s website contains general information directed to Florida residents. This firm does not intend to give legal advice through its pages and/or blog. If you need legal advice, we encourage you to find an attorney licensed in your state. This language on this website does not create an attorney-client relationship between you and this firm.