There are tremendous benefits to creating an Estate Plan that includes a Revocable Trust, pour-over Will, Property Power of Attorney, Health Care Power of Attorney, Living Will, and Health Insurance Portability and Accountability Act Authorization both during life and after death. During life, the plan provides instructions to your family regarding your medical care and finances if you should become incapacitated or are otherwise unable to articulate your wishes. After death, the plan acts as a set of instructions to your fiduciaries regarding the distribution of your property and other assets.
Unfortunately, as many practitioners know, signing the documents alone does not solve every problem or guarantee that everything will work as intended. Sometimes there are things that the grantor or testator does or fails to do that undermines an Estate Plan. This article focuses on mistakes that often result in litigation.
Creating an Estate Plan requires an individual to disclose sensitive information to the attorney creating the plan. Many of us agonize over a discussion focusing on mortality, yet that’s exactly what a discussion concerning Estate Planning does. A comprehensive Estate Plan implements a course of action for that eventuality. People creating an Estate Plan often make the mistake of failing to inform their beneficiaries and fiduciaries of the plan. While the conversation may be awkward, having it not only lets your loved ones know of your plan and their role, but also prevents hurt feelings and potential litigation if the plan deviates from a beneficiary’s expectations.
Clients may hesitate to discuss their plan for fear that if a beneficiary knows he is about to receive an inheritance, he will lose motivation to work hard. Others worry that by disclosing the information, they will cause conflict among family members, or they believe the details of the plan should be secret until after their death. Still others have a hard time assessing the family dynamics or the limitations of their intended beneficiaries. An experienced Estate Planning practitioner assists a client in working through these concerns and encourages an open dialogue with the beneficiaries and fiduciaries to reduce conflict after their death. As Trust and Estate litigators know, a beneficiary whose inheritance failed to meet their expectations makes a great client. Plenty of contentious battles are launched because the grantor treated one beneficiary differently, or one person decided something to the disapproval of another.
Having a conversation with the beneficiaries during and at the end of the process provides several benefits. First, it allows the client to provide the beneficiary with their underlying reasoning or motivation for creating the plan. This helps the client understand and manage the beneficiary’s expectations and address the beneficiary’s questions or concerns. Secondly, the conversation might help the grantor or testator better understand the beneficiary’s needs. This conversation may serve as motivation for the beneficiary to undertake his own Estate Planning. Third, the conversation helps prepare the beneficiary for experiencing the testator’s end of life. Imagine a healthcare agent faced with the decision to terminate life support. Now imagine they never had a conversation with the individual hooked up to the machines. Imagine trying to make that decision without all the information. A conversation about your wishes with those who will make the decision reassures that they know what to do when the time comes.
Having a tough conversation with your beneficiaries about the contents of your plan goes a long way toward preventing litigation. Unfortunately, it can’t prevent all litigation. The plan itself also plays a role. If the plan fails to address incapacity, that could cause significant issues. A comprehensive Estate Plan that includes all the documents noted above will address the subject of incapacity if the Revocable Trust has been funded and contains provisions regarding who serves as Trustee if the original Trustee (who is typically the Trustor) cannot due to incapacity, and how distributions from the Trust should be made during the period of incapacity. If there are assets outside the Trust, then the Attorney-in-Fact acting under the Property Power of Attorney can make decisions regarding those assets. Relying upon the Property Power of Attorney could cause issues if the Power of Attorney is outdated or otherwise insufficient. In any case, the individual acting pursuant to the Health Care Power of Attorney will control decisions regarding healthcare for the incapacitated individual. If an Estate Plan lacks these documents or the documents don’t properly address and plan for incapacity, then the family or loved ones will have to go through the time, effort, and expense of initiating incapacity proceedings.
As this article has demonstrated, while there are reasons that folks want to keep the details of their Estate Plan secret, that can backfire in profound ways. Further, failure to include provisions in an Estate Plan can result in expensive litigation for the estate, ultimately reducing the benefit to the beneficiaries. An experienced Estate Planning attorney encourages a client to have these tough conversations and will include provision that address a wide range of circumstances that the client might experience in their life, and ultimately creates a plan that honors their legacy and protects their beneficiaries. Any plan that fails to address these matters ultimately fails the creator of the plan and their loved ones at a time when they are least equipped to deal with it.
To learn how to protect you and your family visit HaasZaltz.com or call 516-979-1060. You can also email us at info@haaszaltz.com. We are here to help! n
Since 1982, Haas & Zaltz, LLP has delivered peace of mind to New Yorkers and beyond, ensuring your loved ones and assets receive the proper care, attention, and protection. During your consultation, we will explain your best options and develop a comprehensive and personalized plan tailored to your specific needs. Haas & Zaltz, LLP conveys a thorough, caring approach to your Elder Law, Special Needs Planning, and Estate Planning needs. Call us to learn about the variety of legal tools and techniques we use to meet your specific goals and objectives. To learn how to protect you and your family visit www.haaszaltz.com or call 516-979-1060, or send us an email to info@haaszaltz.com.
