In honor of National Estate Planning Awareness Week, we sat down with David M. Byrne, Attorney at Law who has practiced in Estate Planning for 31 years.
FACF: In your 31 years of practice, you have probably seen it all when it comes to estate planning.
DAVE: I have observed the good, the bad, and some horror stories.
FACF: What factors contribute to the different results?
DAVE: “Estate planning” is exactly what the name says: planning for what happens to a person’s property upon death (the person’s estate). 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(ren) 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 regarding who will act for the person financially and medically when needed for the person, who will become the guardian of minor/disabled children, and how the person’s property is distributed as of death.
FACF: What is an estate planning bad result or horror story?
DAVE: A bad estate planning result is when the person’s desires are not met when the person becomes unable to handle the person’s own business or medical affairs and/or upon the person’s 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.
FACF: How does a person end up with a successful result and avoid a bad result or even worse a horror story.
DAVE: The key word in Estate Planning is “plan”. To “plan” as a verb is defined as: “to decide on and arrange in advance”. As a noun, a “plan” is “a detailed proposal for doing or achieving something.” We all have heard the saying: “failing to plan is planning to fail”. If a person doesn’t plan for the person’s disability or death, then the person’s desires are not likely to be met. The best way for a person to plan for that person’s estate, the guardianship of any minor/disabled children, and for when the person is unable to act, is for the person 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 when the person is unable to act or dies. These documents include 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 direct the necessary actions to effectuate same is the best way to make sure that person’s desires are put into effect.
FACF: And the horror stories?
DAVE: I have lots of examples, a few of which are as follows:
People with minor children or disabled children usually have very specific people in mind to be the guardian, if the person is unable to. 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 crises, there is uncertainty and legal proceedings to determine who the guardian will be. Additionally, the court will need to appoint a conservator to manage any monies for a minor child, annual accountings need to be filed with the probate court, the court will need to approve expenditures spent for that minor child, and the child will receive the remaining monies upon attaining the age of 18.
If a person can no longer act financially or medically and does not have a Durable Power of Attorney and Designation of Patient Advocate, the court will need to appoint someone to make those decisions. This may not be the person desired to make these decisions. Annual accountings need to be filed with and approved by the probate court.
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 the person’s 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 also expensive legal proceedings.
If only one child/beneficiary is named as the owner/beneficiary, the child/beneficiary may not follow the desires of the deceased person. There is no requirement for the child/beneficiary to account for the child/beneficiary’s actions. This results in strained relationships and very possible litigation.
FACF: That is all very interesting and helpful information. Thanks Dave for sharing with us.