It’s not fun to think about estate planning. Like religion and politics, estate planning is not something you bring up at parties. (Unless you’re a financial planner and even then, it’s not going to thrill your fellow guests.) Heck! You don’t even want to think about it, let alone talk about it.

Even so, it is a necessity for us all. Since you and I are not currently attending a party, let’s invest four minutes or so together on the topic.

There are many dos and don’ts when planning your estate. Here are two of them. I may write about others in the future. These both come from real-world experiences.

First, Do It Now

I received a call today from a man in his 70s. He was calling from a hospital bed with a heart condition. He was interested in leaving his farm to his grandson and wanted to avoid probate. Evidently, some of his relatives were not happy about his decision to leave the farm to just his grandson. By avoiding probate, his relatives would not have an opportunity handed to them to challenge his wishes in court.

The man purchased my Land Trusts Made Simple® Basic Home Study course to make sure his wants were complied with. I instructed him to read the course first and, call me with any questions.

I’m Talking to You

I know what you’re thinking. I’ve had the same thoughts in my life. “I’m not old. I can do my estate planning a little later,” or “I’m in good health. I’ve still got time to get this done.”

My response to these thoughts and others like them is, “How can you be sure?” How do you know something won’t come up that puts you in an urgent situation? I encourage YOU to act now and not to wait until you are old and/or in a hospital bed before making your estate planning decisions.

Do you have car insurance? How about homeowner’s insurance? Sure, you do, because you want to plan/insure against the potential for loss. The same logic applies to your real estate investments. Estate planning and asset protection are procedures that you should be proactive at and not wait until “the wolf is at the door” to make your arrangements.

Next, Make Sure Your Estate Plan is the Way You Want It

Some time ago a lady from Chicago called my office and wanted to talk about a big mess she was in with her late mother’s property. In 1993 her mother and stepfather formed a Land Trust to hold title to their residence in a Chicago suburb. They made the lady and her stepbrother (whom she had never met) successor beneficiaries.

In 2002 the husband/stepfather died, and the mother hired a lawyer to create a Revocable Living Trust (RLT). An RLT avoids probate and immediately becomes irrevocable upon the death of the grantor, in this case, the mother.

The lawyer moved almost all assets over to the RLT. The sole successor beneficiary to the RLT was the daughter. (Are you getting the feeling that the stepson was soon to be cut out of his inheritance?)

Unfortunately, or fortunately, depending on your perspective, my caller-lady and her mother didn’t examine the lawyer’s work closely enough to see he failed to deed the property out of the Land Trust and into the RLT (which is not what I would recommend doing but that was his plan nonetheless).

This came to light when the mother died and the stepsiblings discovered that since the attorney did not transfer the property out of the Land Trust and into the RLT, the stepson WAS still entitled to half of the property (still held in the original 1993 Land Trust) as a co-successor beneficiary to the primary beneficiaries.

The estimated equity in the property in question was $250,000 and the daughter wanted it all! What did she do? Well sure, she sued the attorney for failing to complete the transaction for her mother. When the daughter called me, she had already spent $80,000 in legal fees suing the attorney.

What Do These Real-life Situations Tell Us?

Land Trusts are great for lots of reasons and one of those reasons is for passing real estate assets to your heirs and avoiding probate. Like everything else that’s important in life, they should be created thoughtfully and not done at the last minute.

Make your plan now and double-check it. Ask questions of your attorney. Review legal documents. You will sleep better when you do!

 

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