Is Your Estate Plan Vulnerable to Being Attacked?
If somebody contests your trust or will after you die, it can derail your final wishes, rapidly deplete your estate with unnecessary court costs and attorney fees, and worst of all tear your loved ones apart. But with proper estate planning, you can help your family avoid a potentially disastrous challenge to your will or trust. Phelps LaClair, serving Scottsdale, Gilbert, Chandler and Tempe in Arizona, is here to help build a strategy to protect your assets and your family in the future. If you are concerned about your estate plan being challenged after you pass away, we can help.
Estate Plan Tips
There are certain ways you can be sure to help protect your plan from being attacked in the future. To save your loved ones time, money and headaches from court battles, the following will be beneficial:
- Do not attempt ‘do-it-yourself’ solutions. Attempting to create or update your will or trust on your own can be an invitation to a court battle. Using generic forms from the internet or store can cause you to miss pieces of information that can negate your entire plan. Handwritten notes or typing out your own amendment to change parts of your estate plan is not a great idea. These changes, in the best case scenario, will be ignored, but in the worse case can invalidate your entire estate plan. The do-it-yourself way is not worth the negative outcomes and future headaches.
- Let family members know about your estate plan. When it comes to estate planning, secrecy breeds contempt. While it is not necessary to let your loved ones know all of the intimate details of your estate plan, you should let them know that you have taken the time to create a plan stating your final wishes and who they should contact if you become incapacitated or die.
- Use discretionary trusts for problem beneficiaries. If there are concerns of a beneficiary being irresponsible with their inheritance, you may be tempted to disinherit them. However, there are other options to consider that could be more beneficial. For example, you can put requirements in place for this beneficiary’s share to be held in a discretionary trust. You can then name a third party, such as a relative, CPA, law firm or trust company, as trustee over the beneficiary’s share. This will ensure the beneficiary will receive trust distributions with terms and conditions you have dictated. The discretionary trust also allows you to be able to control who will inherit the trust balance if the beneficiary dies before the funds are completely distributed.
- Deter challenges with a ‘No-Contest Clause.’ Every trust we create includes a ‘no-contest clause’ stating that if a beneficiary challenges your plan, they are disinherited and receive nothing. Courts vary as to whether the clause is enforceable, but it serves as a deterrent to a beneficiary who is thinking about challenging your trust after you die.
- Keep your estate plan up to date. Estate planning is not a one-time transaction, but an ongoing process. Therefore, as your family and financial circumstances change, you should update your estate plan. This will discourage challenges since your plan will reflect your current wishes. An estate plan that is kept up to date is an estate plan that will actually work when the time comes!
Phelps LaClair is here to help maintain your estate plan in a way that discourages court challenges. Take advantage of a free three-year trust review if you are concerned about your current plan, and remember that all our clients qualify for a free trust review with an attorney every three years. Our experience over many years has shown that our clients who take advantage of this free consultation are well-situated to avoid challenges of estate plans down the road. Contact us today!
Images used under creative commons license – commercial use (10/26/2017) Iain Cuthbertson (Flickr)