When Edward and Beth married, they both had children and assets from previous marriages. They had new wills prepared, with each leaving their separate assets to their own children. When Edward died ten years later, Beth’s attorney advised her that, as a surviving spouse in that state, she was entitled to a percentage of all of Edward’s assets—including the 300-acre farm that had been in his family for generations. Although she knew Edward had wanted the farm to go only to his children, she felt that she and her children had a right to part of it. She decided to claim her share, prompting a bitter battle within the family. Eventually Beth won. But the farm ended up being sold to pay the expenses, and the closeness the family had developed during Edward’s lifetime had been destroyed.
Mary was a widow with no children or immediate family. In her will, she left everything in equal shares to three institutions which had been a big part of her life: her husband’s university for scholarships in his memory; her neighborhood church; and a children’s hospital where their only child had been treated for a terminal illness many years earlier. When Mary died, her will had to be probated before her assets could be given to the institutions. As required by law, a notice of her death was published in the newspaper and a list of her assets was made public. Some distant relatives Mary barely knew saw the notice in the paper, hired an attorney and contested the will. The institutions had to hire attorneys to try and uphold Mary’s will, and Mary’s estate also had to be represented by an attorney. A nasty and expensive legal battle began. Finally, more than four years later, the institutions agreed to give Mary’s relatives half of her estate just to end the fight. This was obviously not what Mary had wanted.
Betty, recently divorced, had a three-year-old daughter named Sarah. She had heard she should have a will, especially because she had a child, so when she saw an advertisement for a will kit, she ordered one through the mail. In her will, she left everything directly to Sarah. She didn’t have that much in assets, so she increased her life insurance and listed Sarah as the beneficiary. She named her sister Linda as Sarah’s guardian, thinking Linda would be able to use the insurance money to raise Sarah if something happened to her. A few years later, Betty died unexpectedly and her will went through probate. Because Sarah was a minor, the court had to establish a guardianship for her. The court did allow Linda to be Sarah’s guardian, but the court kept control of the inheritance—everything Betty left Sarah in her will and the money from the insurance company. When Sarah turned 18, the legal age in that state, the court guardianship, by law, ended. And Sarah received her entire inheritance in one lump sum, which she quickly spent in just one year of expensive living.
Dorothy, a widow, put all of her property into joint ownership with her married son. She did this thinking that, when she died, her property would automatically go to her son without the need for probate. Several years later, her son and his wife separated, and Dorothy decided to sell her house so she could move in with her son. But she soon discovered she could not sell it without her daughter-in-law’s signature on the deed. The daughter-in-law was still legally married to her son and was entitled by law to a “marital interest” in the property. The title company would not insure clear title to the buyer without the daughter-in-law’s signature because it wasn’t clear what her interest would be. She refused to sign unless she got part of the money when the house was sold. Dorothy was stuck. She didn’t know that joint ownership with a married person can include that person’s spouse. Because Dorothy had placed her house in joint ownership, she lost control of her own home.
On the advice of a neighbor, Frank and Elizabeth, an elderly couple, put everything they owned, including their home and stocks, in their adult daughter’s name. They believed this would avoid probate and that all their assets would pass directly to their daughter, their only child, when they were both gone. A year later, Frank died of a heart attack. Several months after that, their daughter died in a car accident. Elizabeth never thought she would survive both her husband and daughter. To add to her distress, Elizabeth now owned nothing in her own name. Everything was in her daughter’s name. She was forced to probate her daughter’s estate to get back her own property. During this long process she had to rely on the court to grant her living expenses. Sometimes the court would approve them, sometimes not. And during a declining stock market, she helplessly watched the value of her stocks fall to only a fraction of their previous value because the court could not react in time for them to be sold quickly. Elizabeth lost her financial independence plus a substantial portion of her assets to probate while simply trying to get back what was hers in the first place.
All of these disasters could have been prevented with proper planning!