IT'S NEVER TOO SOON - The Importance of Proper Estate Planning
Updated: Mar 20
It's Never Too Soon
A long-time client of mine recently passed away from COVID. Over the past 20 years we had had numerous discussions about wills and estate planning. Being an avid procrastinator, he never followed up. He died intestate; which means the State of New York decided how his estate should be distributed, regardless of what he and his wife wanted. Unfortunately, this meant half of his estate went to a daughter from a prior marriage that he hadn’t talked to in 25 years and the other half went to his wife, who needed every penny to hold things together.
Not updating wills, trusts and other estate planning documents can, and often does, create unintended consequences. The same goes for beneficiary designations on IRA’s, 401k’s and life insurance policies. In this era of COVID, we never know what tomorrow holds.
Who Will Decide?
Another totally different, but important example, was a client who went through a divorce and as part of the divorce settlement was required to maintain a $500,000 life insurance policy for the benefit of his minor children. This is not an unusual situation where there is a requirement to pay child support. Unfortunately, the divorce lawyer named the two minor children individually as the beneficiaries on the life insurance policy. The State of New York does not permit minors to be the beneficiaries of life insurance policies in their name alone. If this happens, the State of New York requires that the proceeds of the policy be deposited in a savings account and that the minor beneficiaries can only receive the interest from the account until their 18th birthday. The interest was obviously not enough to support the children. Many court proceedings later, an understanding Judge helped the children out (and saved the divorce lawyer from a malpractice claim) by permitting the use of the insurance proceeds for their support, but only under certain limited circumstances.
The point of all of this is to emphasize how important it is to review all of your financial and estate planning documents on a regular basis and to update your estate plan regularly. It is never too soon because we never know what tomorrow may bring. People often ask me what kind of law I practice. I tell them, “proper estate planning”. When they ask what that means, I tell them that when my clients pass and look down from heaven, their assets have been left to those they intended and in the manner they desired. That is proper estate planning.
Peace of Mind
As a service to our clients, once every three years, or when there has been a life-changing event, we offer a complimentary review of all of their financial and estate planning documents to make sure everything is up to date.
To ensure that you have done ‘proper estate planning’, call us to schedule your complimentary review of your estate plan at (585) 203-1020. You can also email us at firstname.lastname@example.org.