Estate Planning Gone Wrong | True Stories
01 | Lack of Communication Leads To Family Conflict
A client needs his own personal estate plan because of how wrong it went with his dad's - a trust set up to divide assets across 8 children, real estate not properly funded (including a strip of land NEXT to the family beach home that wasn't included in the trust and is causing major issues for the sale), and now the same attorney that set up the trust is charging for the administration and only communicating with one trustee (of 3), causing conflict and division amongst the siblings - exactly what the dad had meant to avoid.
02 | A Blended Family Nightmare
A friend’s father was remarried to her stepmother and they had been married for years. While they were married, she and her stepmother, and even her stepmother’s children, got along well. They enjoyed time together and had regular family gatherings. All that changed when her father died.
She learned that in her dad’s will, he left all his assets to his wife, trusting her to take care of my friend, his only child. His wife had other plans. She ended up taking all his assets, giving my friend nothing, and decided not to speak to her anymore. My friend was understandably upset and asked if there was anything that could be done.
Her options were not desirable. She could go to court and challenge her father’s will, with only a small chance of success, and spend lots of money in lawyers and court fees, or she could do nothing. She opted to do nothing because she couldn’t afford to fight. It was such a sad situation and undoubtedly not what her father wanted.
03 | A “Do-It-Yourself Trust That Failed”
All I can say is, “What a mess.” Jane had a sizable estate. But she had a sizable estate in part because she refused to spend money, so when it came to creating her estate plan, Jane found forms online and drafted her own trust.
Several years later, she created a separate list of items and gifts she wanted to leave to certain family members, thinking that they would receive the gifts by way of the trust. By the time Jane died, she was married to her second husband and the trust stated that he was to inherit all her assets outright. Since she didn’t know the law, she didn’t realize that the separate list she created was not actually a part of her trust, and so she effectively disinherited her children and grandchildren (which was not her intention). She also attempted to record deeds transferring her two homes to her trust, but both deeds were faulty.
Now the family is in court, and has been for over a year, fighting over the disposition of Jane’s estate, as well as what to do with the faulty deeds. They’ve spent lots of money and time fighting - and all that could have been avoided if Jane had just seen a lawyer instead of trying to do her plan herself. In fact, in Jane’s papers she stated that she specifically wanted to set up a trust so her family wouldn’t have to go through probate, yet that’s exactly what happened.
04 | No Plan Means Only The Bank Benefits
A woman needed help after her father died. She lived in a different state, and when her father passed, she went home. She came back occasionally to clean out his house, and months later she saw a letter from her dad’s mortgage company. She was so sure that her father owned his home, but in fact, he was still making payments.
The bank had not been paid in months, so they issued a notice of foreclosure. The house was the only asset her father owned and even though it wasn’t paid off, he had a lot of equity in the home. The woman couldn’t afford to pay her mortgage and his, so she attempted to negotiate with the bank. The bank told her there was nothing they could do until she was appointed administrator of her father’s estate. Paperwork was filed.
Even though we live in a so-called “probate friendly” state, the process takes time and the bank was only willing to wait so long. After several months waiting for the judge to rule and nothing happening, the bank told the woman that they’d exercise their right to foreclose, and soon after, they did. In the end, the woman’s entire inheritance went straight to the mortgage company, and surely that’s not what her father wanted.
05 | An Estranged Child Gets Control
His mother passed. He did not have an estate plan. The mom had been living with his stepfather for over a decade and all mom had was the house. The stepfather was NOT on the deed. They had to get a probate attorney.
They are now a year into it. What makes it worse is that his brother (who was estranged from the mom and had nothing to do with the family) fought to get appointed as executor and won. The brother then evicted the stepfather from the home, and continues to make the probate process difficult.
06 | Kicked Out Of Her Home Of 20 Years
A woman lived with her boyfriend for 20 years in his house. She paid half the mortgage for all of those 20 years. He said he would leave her the house in his Will and promised to get his Will done. But since he had no children he wasn’t too worried about being able to stay in the house once he passed. Unfortunately, he never took the time and died without a Will.
Under the law, and unbeknownst to her, the house went to his 80 year old sister, as she’s his only living relative. His surviving girlfriend doesn’t have the money to bring a court action for the half of the mortgage that she paid for 20 years, and she can’t afford to buy out the sister. All that could have been prevented with a simple Will. Now she’s out on the street at 55 years old and lost all the money she paid for the home.
07 | A ‘Half-Finished’ Will Gives $1 Million To Those Struggling With Addiction
Her mother had her Will drawn up, but she never got around to signing it. The Will would have given half of her estate to the daughter, and half to her sister, who is currently in rehab for drug addiction. The mother didn’t want her children’s inheritance to go to them outright, but rather, held in a trust so someone else would be able to protect the assets from being squandered.
The mother passed away without ever signing her Will. Unfortunately, the state law has a plan for what happens to the assets when a Will is never signed, and it’s not at all what mom wanted. In fact, it’s the opposite of what she wanted. As a result, The sister, also in rehab, will also get about $1 million free of trust, free to do with it whatever she wants.. Additionally, a nephew, who is also addicted to drugs and has threatened the lives of the family, is entitled to get about $1 million outright to do with whatever he wants.
08 | “Poor Man’s Estate Planning” Results In Tax Burdan
A man didn’t think he had much, so he didn’t believe an estate plan was necessary. Instead, he purchased a life insurance policy, naming his long-term girlfriend as the beneficiary, and added her to the deed to his house. What he didn’t realize was that by adding his girlfriend to the deed rather than leaving it to her in a Will, he was leaving her with an unnecessary tax bill.
He died thinking he had taken care of her, but in reality, even though they had been together for many years, his family received the rest of his assets and his personal belongings under the law. She was devastated, not only because she didn’t receive anything from his estate, but also because she must now pay tax on her home when she sells it. If he had just made a Will, and left the house to her in his WIll, she would not have incurred this tax.
09 | She Was Young And Didn’t Think The Worst Could Happen To Her
Jennifer lived in Colorado, and was estranged from her mother and other family members in Iowa. Although she wasn’t an attorney, she knew first-hand through her job the importance of estate planning, yet she was young, single, and hadn’t made estate planning a priority because she didn’t have much.
One day she was in a massive car accident and suffered a brain injury rendering her unconscious. Jennifer’s friends were her chosen family and knew what she would have wanted for herself if she were to become incapacitated; CBD supplements, healthy food, holistic care, and her good friends making decisions for her.
Her mother, on the other hand, thought she knew better and wanted to take Jennifer out of Colorado and back to Iowa. She didn’t want Jennifer’s friends to have access to her, and definitely didn’t want Jennifer to have holistic care. Her mother filed a court action to take over Jennifer’s financial and health care decisions.
It cost Jennifer more than $10,000 - all of the money she had in the bank - because that’s how it works. Even though Jennifer’s friends fought to ensure Jennifer was cared for the way she would have wanted, her mother ultimately won the court battle and moved Jennifer to Iowa where she has been caring for Jennifer in her own way ever since.