Legacy Assurance Plan: How Court Cases Can Offer Lessons in ‘What Not to Do’ in Estate Planning

Summary: Others’ estate plans, especially those published in legal opinions, can be very instructive. They can, in a lot of circumstances, offer very helpful lessons in what NOT to do when it comes to estate planning. Whether it is a plan that is less than complete, the absence of any plan at all or a plan that has documents that are in conflict with one another, the stories of others’ problems that end up in court can help remind you to make sure that you have a plan that is complete, consistent and optimized to meet your needs.

When court cases are published in the law books, they help judges in future cases to make decisions that follow the precedents established by those cases that came before. Estate planning court cases serve an even greater benefit. Many estate planning court cases can provide valuable lessons to anyone who has created, or is considering creating, an estate plan. While some cases involve plans that worked well, unfortunately a lot of cases are the result of planning gone wrong. Much like some TV shows teach viewers what NOT to do when it comes to anything from cooking to home design to clothing choices, a lot of estate planning rulings are the “what NOT to do” stories of estate plans that went awry.

Take, for example, the estate of Leeanna, a woman who lived in the Tacoma, Washington area. Leeanna had four children and a husband, Jim, all of whom survived her when she died in 2012. When Leeanna died, there was uncertainty about whether or not she had created a valid estate plan prior to her death. The woman’s daughter, Heather, went to court asking a judge to make a legal determination and pronouncement that Leeanna died intestate (meaning that she had no valid estate plan.)

Whether or not Leeanna died intestate or not mattered a great deal because of the nature of the assets that Leeanna owned. In addition to the things Leeanna owned in Washington, there was the family home in Cabo San Lucas, Mexico. After Leeanna’s death, Jim sought to sell the Mexican property. Under the Mexican rules of intestate succession and heirship (meaning the system for distributing assets in estates with no valid estate plans controlling them,) property distributes to a deceased person’s children. So, if Leeanna died with no plan (as Heather maintained,) then Heather and her siblings owned the place in Cabo, Jim had no legal right to that property and he could not sell the home.

Jim argued to the court that it didn’t matter whether or not his wife had a will. According to Jim, both he and Leeanna signed a community property agreement. In some states like Washington, there exists the option of signing something called a community property agreement, which can serve as means for avoiding probate. This document can say that all of a person’s assets are community property, which means that all of the property goes directly to the surviving spouse upon the death of the first spouse. Jim’s argument was that he and Leeanna had such an agreement so, upon her death, he owned everything, including the Cabo San Lucas property.

Eventually the case wound through the legal system and all the way to the state Court of Appeals, with Heather receiving an unfavorable ruling. While it is possible that the result was the one that Leeanna would have wanted, the path taken to go that point was something that was less than ideal.

The case of Leeanna’s estate is a reminder of two key things when it comes to estate planning. The first is the vital importance of making sure that all of your documents work toward the same goal. While this woman may have had only the community property agreement, most complete plans involve multiple estate planning documents. If you have a document like a community property agreement (if your state allows them) and you have a will and you have a living trust, for example, is essential that you review these documents periodically to make sure that they are maintained in a way that they will work together harmoniously to achieve your objectives.

The second is the importance of making sure that you have a complete plan tailored for your needs. If you are someone who owns property in multiple states (or multiple countries,) you may very possibly be someone who would obtain a larger-than-normal benefit from avoiding probate. For example, if you have property in multiple states, you might be someone who would derive a very high benefit from an estate plan that includes a living trust. By working with experienced legal counsel, you can get a plan that will help your family reduce delays, stress and expenses after you’re gone.

This article is published by the Legacy Assurance Plan and is intended for general informational purposes only. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal advice. You should consult with an attorney regarding any specific questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services-company and is not a lawyer or law firm and is not engaged in the practice of law. For more information about this and other estate planning matters visit our website at www.legacyassuranceplan.com.