It's terrible when your spouse dies suddenly. But this nightmare can get worse if your spouse did not have an estate plan.
Mark and Eileen had gotten to the point with their estate planning attorney where draft documents had been prepared. Even though their estate planning attorney kept encouraging them to make decisions, Mark and Eileen never got around to resolving a few open questions.
And then Mark was killed by a totally unexpected cerebral hemorrhage. One day he was here, the next day he wasn't.
Then Eileen wondered how she was going to live. She thought things would simply come to her and go on the way they had before, with the same bank accounts, investments, and real estate. But that was not to be.
Much of their property was community, which her attorney explained meant that it could be transferred to her without probate. Without probate, sure - but with a lot of legal papers and a court filing - a "spousal property petition" - that cost her $3,000.
However, her husband had inherited a piece of real estate from his parents. That made it separate property. Imagine how shocked Eileen was to discover that separate property does not go to the surviving spouse in California!
She and Mark had planned that this property would go to her while she was alive, and then pass to their children upon her death. But since her husband died without a will, that is "intestate," California law determined how his separate property would be divided.
Instead of the estate plan they had intended, the real estate was divided into thirds, one-third for her and one-third for each of their two children. Now her family is close, and everything will probably work out all right. But this could be a never-ending nightmare for the widow in some families.
Of course, even getting that far wasn't easy. Her lawyer had to file for probate for the separate property, which meant more forms, more legal mumbo-jumbo, more expense, and of course, more time. All in all, it took two years from the time her husband died until his estate was finally settled.
And the worst part? The legal fees were about $17,000. That's right, $17,000. And the vast majority of that were fees which are fixed by state law based on the value of the probate estate. It didn't matter how much time her lawyer spent on the case, whether there were a hundred pieces of property to deal with or just one, he got the same for the probate - $14,000. (The additional $3,000 came from the spousal property petition above.)
Not finishing their estate plan cost Eileen $17,000, took two years of her life, volumes of paperwork, and ended up with her husband's estate not being passed on the way they had intended.
The moral of this true story: put aside your objections, doubts, hesitations, and reluctance; find a good estate planning attorney; get a will and a living trust - and sign these documents; GET IT DONE!
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To get a free copy of 4 Important Questions You Should Ask About a Living Trust , go to http://www.estateplanningforyou.com. Mitchell R. Miller has been a tax, trust and estate attorney for over 30 years. EstatePlanningforYou.com is a subsidiary of http://www.millermosaic.com.
I got my dad to finish his will a couple of years ago, but I have only half-way finished mine. Thanks for the reminder and the constant push that is needed.
» left by Mitchell R. Miller from Beverly Hills, CA (49 days 16 hours ago.)
Hope you also get your dad to have a living trust. And you should finish your will and get a living trust. If you want to know why you need a living trust besides a will, watch the short video at Estateplanningforyou.
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