Estate Planning: An ounce of prevention is worth a pound of cure

Estate Planning: An ounce of prevention is worth a pound of cure

Part I

Estate Planning can be thought of as a form of risk management. For example, with a complete estate plan, you will be able to minimize the risk that your property will not pass to your intended beneficiaries, that the estate will be subject to tax, that the incompetence of an aged parent will not require an expensive guardianship, and that the State will not collect nursing home bills from the estate.

Nearly two decades ago a young man and his sister asked me to assist them in obtaining their inheritance from their father's estate, who had recently passed away. Their father had remarried after their mother, his wife, died. He and his new wife entered into a Community Property Agreement, which provided that all of their property became community property. As i recall this was only a first step in a comprehensive estate plan, and that he intended to have a will which would have provided that certain items of his property would be inherited by his children. Unfortunately, the father died before he did that. As a result all of his property, including that which he would likely have given to his children, was inherited by his new wife.

Absent a showing of fraud or overreaching or some other equitable reason, nothing could have been done to help those siblings: the Community Property Agreement meant that they inherited nothing. Inasmuch as their was no evidence of misconduct by his new wife, she inherited everything.

It is interesting to note that a similar result could have occurred if the father and his new wife had no Community Property Agreement and if the father had no Will. That is because under the law of intestate succession, “the surviving spouse shall receive . . . : all of the decedent's share of the net community estate; and one-half of the net separate estate of the intestate if survived by issue [children].”

Because there is a strong presumption that all property owned by a married couple is community, the brother and sister would have had the burden of proving that they were entitled to a share of their father's estate.

The moral of the story is this: if you want to direct the disposition of your property after your death, then you need to have an estate plan. If you have no plan, then after you die it will be too late.