We often come across problems that our clients have faced which could have been easily avoided.  All client identities have been changed to protect their privacy.

Many of us consider our friends to be family – sometimes even closer than our actual families.  The following details a scenario where having no estate plan resulted in the wrong person inheriting.

 

The Problem

Ella and Andy have been best friends for the past thirty years, considering one another family. They support and care for one another much like siblings do. Ella has a handful of estranged family members, including an abusive father, with whom she has had no relationship with since she was a child.

On her way home from work one day, Ella was in a car accident, resulting in her untimely death.  Andy was devastated. Years ago, Andy and Ella had spoken about creating their respective estate plans and how they would leave everything they had to one another, but neither of them ever got around to creating their plans.

The Outcome

Because Ella passed away without proper planning, her estate must go through Probate. Probate is the court process that deals with settling a decedent’s estate. During this process, the estate is reviewed by a judge to administer the assets to the persons entitled to receive them. The persons entitled are our “heirs at law”. Heirs at law are determined by their degree of kinship, which has been predetermined by the law – this is called Intestate Succession. Ella was unmarried and had no children, so according to Intestate Succession, her next heirs at law are her parents.

Since Ella’s abusive father was her only living parent at the time of her death, he became the sole beneficiary of her entire estate. Andy, heartbroken over his friend’s death, felt helpless as he knew she would never have wanted her estranged father to inherit her estate. Because the rule of Intestate Succession does not account for friends, it is extremely important to prepare an estate plan that makes specific beneficiary designations, and specifically disinherits any heirs at law that you would never want to gain your assets.  

The Solution

Since Ella lived in California and owned a home, she needed to create a Trust in order to avoid Probate court. When the creator of a Trust passes away, the manager of the estate (Trustee) administers the Trust and distributes the assets per the decedent’s wishes to the designated beneficiary.

It is clear that Ella wanted her estate to go to the most important person in her life, namely Andy; but because she never created her estate plan, her estate passed to her father, the last person she would ever want it to go to.

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Did you know?

In California, if you do not have the appropriate estate plan, the Probate court will decide who inherits your assets according to the rules of Intestate Succession.

Thanksgiving is a good time to think about family, friends, or charities that you may want to designate as beneficiaries of your estate plan. We can help you set up a new revocable trust, or update an existing trust, to reflect your wishes.