The old saying, “there is no time like the present” may not have been conceived because of estate planning, but it does apply. In fact, the full quote is, “No time like the present, a thousand unforeseen circumstances may interrupt you at a future time” (Proverbs Exemplified, 1790) is even more applicable.
Last minute estate planning comes in many forms. Sometimes it is because someone is going in for surgery and is concerned that their affairs are not in order. Other times it is because someone’s health is declining due to a recent (or not so recent) diagnosis that affects their life expectancy. Finally, it can be a combination of the two wherein someone is diagnosed with an illness but doesn’t know whether or not it is terminal.
Sometimes we don’t have a choice when it comes to last minute estate planning. But, all too often, people walk into my office having been given six months to live seven months ago – in other words, not only did they know they were terminal six months ago, but they are now one month past their life expectancy. I am always surprised that even given this sort of serious and specific news some people are just unable to get their planning done.
Last minute estate planning can work just as effectively as regularly scheduled planning, but it can also result in unintended consequences. Let’s take a look at some.
Funding assets into a trust. After a revocable trust is created, assets (bank accounts, real estate, etc.) must be transferred into the trust for the trust to be effective. Although this isn’t difficult or time consuming, it may prove to be impossible on a shortened time schedule. When transferring bank and stock accounts, many institutions require an appointment and the scheduling of a notary public in order to complete to proper paperwork. This can take days or weeks and when doing last minute estate planning, and that can prove to be too long.
When transferring real estate into the trust, the attorney preparing the documents should prepare the deed(s) for you and have you sign them when the overall plan is signed. The deed is then recorded. Although this often goes smoothly, there is a slight chance the deed will need to be revised for a minor reason. This won’t be known for a week or so and if the planning is done last minute, these issues may not come to light until after it’s too late. When planning with ample time however, the deed can simply be updated and re-signed – causing no issues.
Rushing to a decision. For some clients, estate planning decisions are simple – for others, it is not so simple. With last minute estate planning, it is unfortunate that a rushed decision is necessary and thus not always the best for their particular situation. Furthermore, when doing last minute planning the planner is not always thinking clearly whether it is due to stress or even medication, this can lead to haphazard or ill-conceived estate plans.
Challenges to documents after death. When someone plans last minute because of an illness, they are often in the hospital or under hospice care, and therefore likely medicated. When under the influence of medication, people don’t always make the same decisions they would if they were not on any medication. Therefore, the simple presence of medication makes a challenge to the documents after someone dies more probable. The courts can look to the amounts and effects of medication to decide if the person making the estate plan had the capacity to do so under the rules of the law.
For all these reasons and many more, we recommend undertaking your estate planning as soon as you are able.
Anyone of those aforementioned thousand unforeseen circumstances may interrupt you and cause unnecessary costs, delays or worse. After all, there is no time like the present.
Eric S. Gullotta, JD, CPA, MS (Tax) focuses on estate planning and taxation law. His office is located at 232 West Napa Street, Suite A, in Sonoma. Contact him at 938.7234 or Gullottalaw.com