Because I work too much, I seldom have time to date. However, if or when I do go on dates, I like to make sure that the woman I am seeing is both caring and smart. After a few dates, I need to try to see my date through both of those lenses to know that she actually is both caring and smart.
Similarly, each person’s estate plan should be evaluated in two ways. First, all documents involved in estate planning should be prepared and read together with each other. Second, each estate planning document or agreement should be read in isolation or separately from the other documents and agreements.
First, it is important to evaluate all together, all documents that govern asset distributions post-death. Several years ago, a client shared with me his plan for when he died. He intended to give his farmland to his sons and to have several CDs paid to his daughters. The way he had it figured, everything would equal out to about the same monetary amount to each of his children.
Everything was peachy until farmland prices skyrocketed about six to seven years ago. All of a sudden, my client was stressed because the monetary amounts to his kids would not be even close to equal. Fortunately, my client recognized the issue, and we were able to create a formula to equalize the dollar amounts based upon farmland prices and the value of the CDs as of the date of my client’s death.
My client’s kids should be thrilled to inherit anything, but hard feelings can more frequently arise in the midst of grief if there is any imprecision in expressing the deceased loved one’s wishes. Looking at all assets and governing documents together ensures harmony and consistency in these situations.
Second, it is crucial to evaluate all estate planning documents and contracts separately from each other, because most estate planning documents and contracts will be actually be administered separately from each other.
A few years ago, a different client asked me to review her estate planning documents that had been prepared by her prior attorney before that attorney died. The client told me that she wanted a certain sum, let’s say $1,000, to go to one grandchild and the rest of her assets to be divided and paid equally to her children. My client’s will properly reflected this intention.
Because my client wanted to make absolutely sure that the $1,000 was available for the grandchild, my client created a separate bank account that held $1,000, with that account payable to the grandchild upon my client’s death.
The problem with my client’s estate plan was that when my client died, the $1,000 in the bank account would be paid immediately to the grandchild. Then, the will would be administered through probate completely separate from the bank account. Thus, under my client’s existing documents, her grandson would have inherited $2,000.
It is crucial to know that estate planning documents will actually get the job done collectively and separately.
Lee R. Schroeder is an Ohio licensed attorney at Schroeder Law LLC in Putnam County. He limits his practice to business, real estate, estate planning and agriculture issues in northwest Ohio. He can be reached at Lee@LeeSchroeder.com or at 419-659-2058. This article is not intended to serve as legal advice, and specific advice should be sought from the licensed attorney of your choice based upon the specific facts and circumstances that you face.