ESTATE PLANNING HORROR STORIES FROM THE REAL WORLD (#2)
Recipe for Disaster
This week’s story involves a gentleman in his 50’s who recently died of cancer. He left behind a 16 year old son and a wife, who he married 9 months before his death. This man was injured in a serious accident many years ago which was someone else’s fault. As a result, he received a settlement in the form of an annuity which made monthly payments to him for life, with payments guaranteed to be made for at least 20 years, even if he didn’t live that long. The lawyer who obtained the personal injury settlement prepared a basic Will, which was signed in 1995. It named the man’s brother as personal representative of the estate. Unfortunately, the Will never was updated, even after this gentleman remarried 9 months ago.
The man’s life insurance proceeds and his entire estate were left to his 16 year old son. (Who, by the way, was in jail at the time of his father’s death!) In the state of Florida, a minor cannot legally hold title to property. When a minor receives an inheritance, it is absolutely necessary that a court supervised guardianship be established to hold any money or property until the minor reaches the age of 18. The Will did not direct who should serve as guardian of the minor child. This creates a possible conflict between the man’s brother, who he wanted to handle his estate, and his previous wife, who he divorced some years ago, but who is the child’s biological mother. This likely will result in a contested guardianship proceeding that will drain away a good portion of the 16 year old son’s inheritance.
Additionally, in Florida, because the current spouse was not provided for in the Will, she is known as a “pretermitted spouse”. When a person marries after making a Will and the new spouse survives that person, the surviving spouse (even if they have been married only 9 months) is entitled to receive a share in the estate equal in value to what she would have received if there had been no Will at all, unless provision has been made for, or waived by, the spouse in a prenuptial or postnuptial agreement; or unless the spouse was provided for in the Will. In our case, none of the above applied. So, by operation of Florida law, our 9 month spouse is entitled to one-half of the entire estate!
This gentleman also owned a home in which he and his wife resided prior to his death. The home likely will be considered to be “homestead” property under Florida law. By virtue of the operation of homestead law, the 9 month spouse will be entitled to a life estate, meaning that she will have the right to live in the house for the rest of her life, and the son will have a remainder interest, meaning that he will receive the property only after the surviving spouse dies.
As you can see, even though the person had a “legal” Will, the estate is a mess. The wishes he set forth in that Will, that his son receive his entire estate, are not going to be carried out. This scenario illustrates the need for continued updating of your estate plan, so that it stays current with your life changes. It is very important to maintain an ongoing relationship with an estate planning attorney who would have provided counseling on many issues, such as the need for a prenuptial or postnuptial agreement before he married, to limit his new wife’s claim on an inheritance he wished to leave for his son; updating the Will to mention the current spouse; or on the preparation of a trust to hold the assets of the minor child, which would have included the naming of a trustee of the father’s choice, and instructions to keep the money in a lifetime protective trust for the child (who was known to have behavioral problems) or to at least delay distribution of the proceeds for some years beyond his 18th birthday. The homestead property also could have been addressed by either a prenuptial or postnuptial agreement.
These are just a few of the issues that could have been handled in a different manner by counseling and updating with an estate planning attorney at the Cramer Law Center. Now, the son won’t receive all of the inheritance his father intended. What is left will be available for the son to spend without any restrictions when he turns 18, whether or not he still is in jail. So we can see having a “legal” Will was not enough to allow our gentleman to pass on his assets as he intended and, indeed, has turned out instead to be a recipe for disaster.
