Costly Legal Problems in the Absence of Core Estate Planning Documents

Individuals who do not have their estate planning documents in place should worry about their families having at some point to hire lawyers and pay legal fees to sort out and clean up a big mess, particularly if a family member becomes incapacitated or dies.

There is an estate tax exemption for certain smaller estates.   However, there is no exemption from legal fees when these messy situations occur.

Most people think only of estate planning when their estates are large enough to raise a concern about estate tax.   This is short-sighted and fails to take into account that virtually every family, regardless of the size of the estates, will have to deal with costly legal problems in the absence of adequate planning.

One of my primary goals for clients is to keep them later from having to hire and pay lawyers to clear up a bad situation that could have been prevented.

For most families the following core estate planning documents are extremely effective and, when well drafted, include the necessary flexibility so as to deal with future changes in the family situation and the tax laws:  separately for each spouse a revocable living trust (called a Declaration of Trust), a related pour-over Last Will and Testament, and financial and health care powers of attorney.

The Declaration of Trust is the core document and includes trust provisions that apply while a person is alive (especially in the event of incapacity) and after the person’s death for their beneficiaries.

As an aside I frequently prepare the above documents on a flat-fee basis, rather than at an hourly rate.  This fee approach helps many clients finally get these documents in order and get this important item off their longstanding to-do list.

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