All of Estate Planning boils down to (1) recording what you want to happen to your property when you pass on and (2) taking care to meet all the requirements of state law to distribute that plan successfully.
Many will tell you they have the answers, and some really believe they do, when they have learned only a principle or two of the law. The old adage, “a little knowledge is a dangerous thing,” applies here and the danger is yours.
I have encountered a variety of plans prepared by non-attorneys. One was a notary in a local hospital. He would ask people if they had an estate plan, and if they did not, he would offer to prepare one and charge them must less than an attorney. Unfortunately, the man knew little of the law, and his plans were a mess full of gaps and errors that could easily be exploited by someone who wanted them to fail.
In another case, the seller presented themselves as an “Estate Planner.” They were not an attorney. They may have taken a class or attended a seminar where they paid someone else for credentials. But they did not know the law in Utah. When they prepared the plan, they used software prepared by an attorney in another state. The laws there were different, and it was obvious that the documents were not prepared with Utah law in mind. The biggest mistake happened when the client signed their will in front of the Estate Planner. The client’s adult children were present, and they were allowed to sign as witnesses. The Estate Planner had no idea that witnesses cannot be family members or be named as an heir in the Will. They were both. This act alone made the Will easily beaten in a court of law.
I have seen companies that sell estate plans advertising that they are faster and cheaper than an attorney. All of their reviews are from happy clients that paid less. Unfortunately, an estate plan is not “one size fits all.” Just like a doctor’s prescription, the plan must be designed for your situation. Improperly prepared plans may look like they will work, but no one will know for sure until you die.
State and Federal laws regarding Estate Planning and Taxes are firm and cannot be ignored. When someone prepares an estate plan they are making an attempt to meet all of the requirements of those laws.
When is an Estate Plan prepared properly?
Nearly all estate plans, even the poorly prepared ones, will record what you want to happen to your property. But many of those plans fail to meet the requirements of state law. Does this matter? In some cases, the heirs get lucky, and no one knows the plan did not meet state law. They collect their share of the property and proceed with life believing that the estate plan worked. But did it?
I often encounter people that are trying to sell a piece of real estate owned by an ancestor, only to realize the property is still in the ancestor’s name. They come to me in a panic because they have found the right buyer for the property, but the title company is telling them they have no authority to sign a deed to sell the property! We have to do a probate.
Family members may have been living in the home for decades, or farming the land for many years. They may have even been paying the property taxes the entire time. Please note that counties will accept payment of property taxes by anyone. A poorly prepared estate plan will fail to pass on the property, and when the heir sells the property, we are forced to do probate.
Properly prepared estate plans will meet the requirements of third parties like the county recorder, the Utah Division of Motor Vehicles, the Banks and the IRS. Failing to do so will usually result in a probate, and possibly a heavy tax bill.
Properly prepared estate plans will also be ready for an attack. If someone disagrees with your plan, they can argue it failed to meet the law and a judge may throw it out entirely, or worse, the judge and the parties may come up with something totally different from what you planned.
Your estate plan is similar to a knight in armor. If there is a hole in the armor, others can take advantage of the hole and defeat the plan. I have reviewed many estate plans prepared by others. Some of them were prepared by attorneys.
Here are a few holes I have encountered:
One attorney prepared an estate plan for their client, but for whatever reason, they were unable to meet together for the signing of the plan. The client, not fully understanding the documents on their own, did their best and took the plan to the bank to sign in front of a notary. Estate plans have several places that need signatures. The client did their best to find these and sign them, but several things were missed, leaving gaping holes in the plan.
Another attorney did have a signing session with their client, but found themselves one witness short. In Utah a minimum of two witnesses must sign a Will. To prove that the will was properly signed and witnessed, a notary will check the ID of each signer and then notarize the document. In this case, the attorney had both signed as a witness and as the notary, effectively notarizing their own signature. This improper use of notary left the will open to attack.
Another plan was fully signed and properly notarized, but the error was difficult to detect in advance. The attorney, as requested by their client, prepared a Trust leaving a different piece of real estate to each of the client’s children. Later, the client sold one of the properties. No one updated the estate plan, and when the client died, one of the heirs got nothing. Life changes can defeat even a properly prepared plan. It is advisable to review your plan with an attorney every 5-10 years to see if any of your life changes have left holes in your plan.
Some attorneys prepare plans, never asking whether the clients are in a second marriage. If a surviving spouse is not the parent of the deceased spouse’s children, then state law steps in to make a division of the property that rarely matches whatever was in the estate plan. If all survivors agree on following the original plan, then it may stand, but if just one person disagrees, the plan will fail in court.
Other attorneys will do seminars, selling a plan with a large binder, full of many documents that take the estate plan in directions the client never needed. Some are quite complicated. One client told me they paid $5,000 for their plan. Plans like these can fail simply because the client had no idea how to maintain them. And they paid them more than twice my fee!
As I have stated previously, I do free consultations. If you have an estate plan, please give me a call and we can review it together and look for errors and gaps. This visit costs you nothing. If your plan is set to fail, you will leave with the knowledge that you still need a plan, or you may decide to hire me to repair or replace your plan. Let me give you the information you need to protect your plans!
THIS ARTICLE OFFERS GENERAL LEGAL PRINCIPLES AND IS NOT A SUBSTITUTE FOR ACTUALLY MEETING WITH AN ATTORNEY TO DISCUSS YOUR SPECIFIC CIRCUMSTANCES. DO NOT TAKE ANY ACTION BASED ON THIS ARTICLE WITHOUT FIRST DISCUSSING YOUR PROBLEM WITH AN ATTORNEY.
