Making a Plan and Checking it Twice

One of my favorite questions from clients comes up when we discuss estate planning and, specifically, whether or not they've covered all of the basic items of a complete estate plan. Their question generally goes something like this:

"What's the point of doing all this nonsense if I don't benefit from it? I'll be dead." 

I'm reminded of a story about a family I knew who really had it all together. Their aging father had a single brokerage account with a hundred thousand dollars, his primary residence with no mortgage, and a few other assets of value (vehicle & checking accounts). He lived a healthy and happy final few years, and the adult children were all proud that they had helped their father keep his affairs in good order along the way. They had his will, powers of attorney, and medical directives that documented the most important aspects of his wishes. 

When he ultimately passed away, they were shocked to learn that the institution holding the brokerage account required a court order to complete the payment to any beneficiaries. There certainly wasn't any confusion about who might inherit the assets, and their father's will clearly detailed an equal split among his children. There weren't even any complicating factors such as deceased heirs or adopted children.

So did something go wrong? Not really. Everything ultimately passed through to the intended heirs.

However, in this specific example (in Missouri), they could have taken these steps to completely avoid the involvement of probate court and achieve an immediate passthrough of assets to the beneficiaries:

  1. Add a beneficiary deed on their father's house.
  2. Add a 'transfer on death' beneficiary designation to the investment account, checking accounts, and car title.

Unfortunately, people can get stuck in probate even after hiring an expensive estate attorney. They'll spend a substantial amount of time drafting the plans (usually months), and all that should happen thereafter gets lost in the shuffle of paperwork and signatures. For example, this particular family probably had a detailed letter from their attorney explaining in legalese how to complete items #1 and #2 above.

That's not enough, in my opinion.

Without someone to walk them through the next steps, it rarely gets done. So, what's the answer? An experienced investment advisor can close the gap between the drafts of the plan and the fully implemented version of it. Each has its own unique characteristics (especially depending on the state of residence), but every estate plan should aspire to avoid probate. And we can help.

So, if you ever wonder why a fully implemented estate plan is helpful, just think of the person chosen to administer your estate after your death. You can make the job really easy on them if you'd like.