Making an estate plan is a complex process that can sometimes take quite a while, from the time that you lay out all your assets to the final process of executing a will properly in front of witnesses, months can pass. For people who are experiencing a serious illness or even those in relatively good health, this span of time could make a big difference. In one recent case a man suddenly passed away while in the process of updating his estate plan, leaving his sons to pursue legal action to see that his final wishes were respected.
One big problem is that we take a lot of different steps in the estate and tax planning process, many of which come before executing a will. For example, before one finishes a will it is often advisable to restructure assets to put them into a trust or to gift them outright to a friend or family member. Sometimes this process can take place over a number of years as one develops a gifting strategy to minimize tax liability.
However, if those steps are taken but the final plan is not encoded in a properly executed will, only a part of what we intended may take place. In this case we discussed above, the man took significant steps to restructure his business and began establishing a charitable trust when he suddenly passed away without completing the final steps.
So what happens to your assets in that situation? Well, the ones that have already been transferred will likely remain where they are. The others will pass according to a previously executed will if there is one, or if there is not another will the assets will pass by a statutory scheme adopted by the state, typically to one’s spouse and offspring. Of course, with the help of an experienced estate planning attorney you can hopefully avoid these issues or provide your family with an advocate to help sort them out.
Source: ABA Journal, “Man implements $200M estate plan, but dies before signing will; songs file unjust enrichment suit,” Martha Neil, Oct. 21, 2013.