During the years I spent practicing as an estate planning attorney, I saw firsthand the devastation caused by a lack of estate planning. As I recall these times, one particular client comes to mind. Approximately eight years ago, while practicing in a mid-sized law firm in Sacramento, Calif., I was visited by a woman in her mid-50s who had recently remarried. Apparently, about five years prior to our meeting, her first husband of 25 years had died, leaving her alone with two daughters in their early 20s. While her first husband was alive, Maggie* and her husband were able to acquire and pay for a home and two rental properties. With the proceeds from her husband’s life insurance policy, Maggie was able to pay off the mortgage balances on all three properties and supplement her income from the rentals by working part time. These three properties represented the vast majority of Maggie’s wealth.
Now newly remarried, Maggie visited the law firm as she wanted to re-title the real properties in her name to those of herself and her new husband who was 35 years old. During our meeting, I explained to Maggie that if we modified the title to these houses to herself and her new husband as joint tenants, as she requested, it would mean that she and her new husband would each be considered 100-percent owners of the properties, and that if she were to pass away, her new husband would likely be deemed the surviving 100-percent owner, as her interest would be extinguished even if she had prepared a will stating otherwise. The net effect of this, I informed Maggie, was that her daughters would effectively be disinherited should her new husband fail to provide for them at his discretion. I went on to explain other risks in the event of divorce, including different options for titling the properties, which would serve to limit the interest of her new husband.
Despite my efforts, Maggie insisted on having the properties titled in joint tenancy, explaining that finally, after five years of being alone, she had found someone who loved her and wanted to share his life with her. Now that she had found this person, she did not want to put anything between them and wanted to share everything in her life with him. After the meeting, I arranged the paperwork, and the properties were retitled into joint tenancy.
Based on my meeting with Maggie, it appeared that her decision was driven almost entirely by emotion. While I cannot be certain, her actions suggest that her decision was influenced either overtly or subtly by the desires of her new husband. If this is true, then the incident was a tragedy, not only for Maggie and her daughters, but for Maggie’s first husband, who certainly would not have wanted his ife and daughters to be taken advantage of in such a way. Had he executed proper estate planning prior to his death, much of the risks associated with the previously mentioned incident could have been avoided. Unfortunately, as is often the case, we are too busy with life to prepare for death.
I was once asked by a client when the ideal time would be to prepare an estate plan. I informed him that when he becomes aware of when he will die, or about to suffer a debilitating illness, he should notify me at least 45 days prior, as this would be the ideal time to establish a plan. Of course, I was being facetious, as most of us are unaware of this timetable. As such, it is my belief that everyone should be prepared at all times by having proper estate planning in place.
