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Estate Planning Using a Will: Pros and Cons

How a will works in conjunction with your estate plan

An Estate Plan is a plan, clever enough for your unanticipated life events and stupid enough to think your heirs merited what you left them. Most people perceive a "will" as their estate plan in its entirety. Many also believe that a properly executed will naming heirs to your assets is enough to overcome the challenges deserving of who get’s what after your death in satisfaction of what they think you owe them. Not to exclude the IRS and other agencies.
After the widespread litigation and underemployed lawyers, a will in its simplest description, is nothing more than a wish list of their dreams because it’s easier than self-deceit. A will can be contested, must be probated (made public) so that the wish list can be challenged by heirs, and all potential real and unexpected creditors. The cost, time delays, and subsequent clearance of all real and not so-real challenges to the probate process. A will, properly drafted or not, is worth the flush of toilet paper, says Rocco Beatrice, Managing Director for Estate Street Partners, Boston.
-- Your beliefs may come into play when determining if you were in your “right mind” when you drafted your will. --
In (RE Honigman: Court of Appeals of New York, 1960, 8 N.Y.2d 244, 168 N.E.2d 676, 203 N.Y.S.2d 859): A husband cut his wife out of his will because he believed that she was cheating. After he died, the wife argued that he was suffering from insane delusions, but the court did not believe her argument. She then appealed the verdict and had the will overturned to collect the assets.
-- Even when the court grants your wishes as you wrote them, your family may spend a lot of time, money and emotion sorting things out --
Gilmer v. Brown: A woman who was advancing in age and who had been financially taken advantage of decided to obtain a guardian to safeguard her money. After a guardianship had been set up for her, she executed a will. At her death, the family challenged the will saying that she did not have the capacity to enter into a will because she had a guardian. The court case continued for years tying up the estate. Finally the appellate court ruled that the standards for capacity are not the same as the standards for guardianship and the estate was finally passed through the will.
-- Maybe just being elderly can bring your wishes into question --
In Re Estate of Marsh: An elderly woman with alzheimer’s disease wanted to some of her assets to a person who had helped her buy a condo. Her family began to fight over this and she decided to write a second will leaving the assets to her son and daughter-in-law and none to her daughter or husband. She wrote that she hoped that this would stop the fighting. At her death, her husband probated the will. The daughter and son contested the will saying that she was incompetent to sign a will and/or she had been unduly influenced by her son. The mere fact that the woman had alzheimer’s disease and that her son had voiced his wishes to receive assets from the sale of the condo was enough for the appellate court to sent the case back down to the lower court to be retried.

A good estate plan, must:

  1. Eliminate potential frivolous lawsuits from known present, past, and unknown future potential creditors, including IRS and other government, or quasi-government agencies i.e. Medicaid.
  2. It must consider the income tax consequences up to and after the death of the individual’s accumulated wealth. It must be able to reduce, if not eliminate, the gift tax consequences, the income tax consequences, the estate tax consequences, future generation income and ad-valorem taxes, and must be flexible enough to accommodate future legislated assaults.
  3. It must consider your family dynamics of present and future generations. Age of the individuals owning the assets, minor children, future generations, provision for incentives for how, when, and circumstances of distributions. What if you have a rocky marriage, second marriage, minor children requiring guardianship, ungrateful or problem children, children of a prior marriage, rocky marriages of your adult children, financial capability of your children, legal entity ownership of your assets, higher than normal risk of owned businesses, complicated financial arrangements, future income streams, your personal needs and desires.
  4. It must consider government present legislation and compliance, future legislative proposals, regulations, taxation, and other general assaults on your wealth.
You get what you pay for. A will is cheaper than a full blown estate plan requiring professional due care addressing past, present, and future considerations. A will can cost you anywhere from $250 to $2,000 but changes nothing, because title to your assets remains with the most exposed individual, you. Anything titled in your name, or associated, or remotely connected to your name, is subject to a frivolous lawsuit or worse, judicial or legislative confiscation i.e. Medicaid, taxation, or regulation. That’s why I state, a will is not worth the paper it’s written on.

A good estate plan will:

  1. Reposition your ownership / legal title to your assets.
  2. Eliminate probate.
  3. Eliminate or reduce frivolous lawsuits.
  4. Eliminate estate taxes.
  5. Eliminate the Medicaid spend-down provisions and related state recovery.
  6. Reduce your current and anticipated future income tax liability.
  7. Take advantage of current reportable gift-tax exclusions ($5,250,000 for 2013) and anticipate compliance or the elimination of future law changes.
  8. Dictate from your grave, the disposition and use of your assets.
  9. Provide incentives for your children or other heirs.
  10. Be flexible to make changes as they become necessary to be in compliance with new laws and regulations.
  11. Be in compliance for the next 100 years.
  12. Provide a back-up exit plan.
The largest benefit of a will is it is an efficient way to choose a legal guardian for a minor child, therefore those with minor child should include a will as a part of their estate planning. Hire a professional to do your estate planning. One that has the intellect to distinguish a robotic, one size fits all, copy and paste, … to experience gained by gray haired experience and creativity driven by hunger, love, pain, and fear.
A comprehensive estate plan is imagination meeting reality.
Protect your assets for yourself and your children and beneficiaries and avoid tax dollars. Assets can be protected from frivolous lawsuits while eliminating your estate taxes and probate, and also ensuring superior Medicaid asset protection for both parents and children with our Premium UltraTrust Irrevocable Trust. Call today at (888) 938-5872 for a no-cost, no obligatioin consultation and to learn more.
Rocco Beatrice, CPA, MST, MBA, CWPP, CAPP, MMB - Managing Director, Estate Street Partners, LLC. Mr. Beatrice is an "AA" asset protection, Trust, and estate planning expert.



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