A young couple is just starting out in life with two young children and wills they've created from forms from an Internet website they heard about on the radio. They've arranged to leave everything to each other, and then to their children. While their children are still minors, both parents are tragically killed in an automobile accident. The wills are presented in probate court, and the proceeds are divided into two trusts, both supervised by the court and subject to annual accountings and court appearances. The small estate is quickly depleted by maintenance costs, legal fees and overly conservative investments, and while still in their early teens, the children run out of money. A simple will is an inadequate replacement for estate planning, especially when children are involved.
Another young couple creates a well-conceived estate plan even before their first child is born. As the years go by and their financial planning does well, they stop reviewing it annually. The plan has done so well because of their continuing saving and sound investments that the estate is now subject to estate tax. When both die after living rich and full lives, the federal government takes a large percentage of everything they've built and saved. Estate taxes can reach as high as 55% and continue to change at the whims of Congress. If you fail to review your estate plan periodically, it may fail to provide the protection you desired for your loved ones.
A working husband and wife have their own home and a hefty life insurance policy. They've designed an estate plan to provide for their three children through detailed, individual trusts. They fail, however, to provide a backup guardian, and while this critical decision remains unmade, they are both killed in an airplane crash. The attorney can testify about who they wanted to raise their children, but a judge ends up making the critical decision of who will be the childrens' guardian. Per the terms of the trust, the court will place their assets into separate trusts for each child, increasing the maintenance costs and reducing the plan's flexibility. When one of the children incurs massive medical costs that depletes her trust, neither the trustee nor the other children can help in any way except to offer sympathy. The fiduciary laws that govern the children's trusts do not permit them to gift their money (even to another sibling in need), and the ill child's future is uncertain. You don't know the deadline for planning your estate. Estate and tax planning should NOT be postponed, especially where young children are concerned.
A young and active father dies from an unexpected heat attack. His surviving wife can still name a guardian for their young daughter, something they put off while both of them were still alive, because they thought they could "do it later." What they failed to consider was his separate property -- some from an inheritance that he didn't even know about. There's no will to guide the court, so half of his separate property is placed into a trust for the daughter. The wife's hopes to stay at home with their daughter evaporate with the restrictions the court places on the trust, and she is forced to return to full-time work to support herself and their child. Even if one spouse survives, a professionally crafted estate plan is still crucial to ensure your family's economic security.