Time, Detail, Title of Assets & Clarity are Critical to an Effective Estate Plan

On October 12, 2010, the Court of Appeals of Michigan reaffirmed the notion that the title of assets and clear language in a Will or Trust is key effective estate planning. While we want to believe that our friends, family, and peers are goodhearted and will honor their words, the only way to ensure that our assets are distributed as we desire, is by taking the time to effectively plan, which includes drafting the right document and making sure that assets and beneficiary designations are coordinated with the documents.

The decision in In re Estate of Helen Bandemer, came as a result of Ms. Bandemer trusting her children to divide her assets equally.  In this case, Ms. Bandemer owned several of her assets jointly with one or more of her children.  At her death, the children who were designated as joint owners took possession of the property held jointly, while other children received nothing.  However, according to some of her children, her intent was for her assets, no matter how titled at her death, to be divided equally amongst her four children.  The Court held that the title of assets controls and notwithstanding Ms. Bandemer’s Will or intent, the children who were designated as joint owners received the jointly held property.

It’s unfortunate that many people, like Ms. Bandemer, underestimate the effort required to accomplish a solid estate plan which can be a costly mistake.  The time and effort spent working with an experienced estate planner should result in a seamless distribution of one’s estate, avoiding litigation and family disruption.  The right estate planner will emphasize that the title of asset and the designation of beneficiaries of life insurance and retirement plans is equally as important as the drafted estate planning documents.

You may be asking yourself what should Ms. Bandemer done.  In my experience, people add their children as joint owners of their property to avoid probate.  What they do not realize is that the joint ownership designation exposes their assets to the creditors and bad marriages of their children and can effectively disinherit one or more of their desired heirs.  The better solution would have been for Ms. Bandemer to have created a revocable living trust and transferred her assets to the trust, to be divided by its terms upon her death.  If she wanted a child to help her manage the assets, she could name a child to be a co-Trustee with her.  Thus, with effective estate planning, her assets would have been distributed as she wanted, without probate and family strife.  This case illustrates that it is essential to carefully prepare for the future, no matter what size your estate is, with the right estate planner who can guide you to insure that your assets are distributed to the right persons, at the right time, and in the right manner.

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