Sometimes even a good estate plan can run into dire straits when the universe throws you a curveball. On the other hand, more often than not, when an estate plan fails and litigation follows it is because the estate plan was not a good plan at all. Legal mistakes and cut-corners are liabilities not worth keeping on the books, as a growing body of case law goes to show. Do not let a legal mistake haunt your estate, your assets or your family after you are gone. When it comes to estate planning, the liability of legal mistakes and cut-corners has a special kind of edge to it since it is so often the family or your partners who end up feeling the burden or even winding up in litigation. What do these cases look like and what terrible mistakes have been made? Forbes recently compiled a quick list of recent litigation and legal cautionary tales worth perusing in an article titled “Legal Mistakes That Haunt After Death: Three Cases.” Consider the following: • Selzer v. Dunn, or, ‘why you should always ensure that an entire plan is in writing and in place before you rely upon it.’ This was the case of two business partners who took out life insurance policies on one another ostensibly to fund a buy-sell agreement, but no buy-sell agreement was ever drafted. The family of the deceased was stuck with the shares to the company rather than the life insurance money intended to buy them out. • Aldrich v. Basile, or, ‘why DIY will writing and fill-in forms can get you into hot water.’ Here is the case where a do-it-yourself will writing kit could not properly account for state law, leading part of the family to argue the intent of a codicil to change the will was clear while the other half of the family argued it was unenforceable. • PHL Variable Insurance Company v. Bank of Utah, or, ‘why lying on legal documents is just a bad idea and maybe outright fraud.’ Here, the deceased had lied extensively on his life insurance application (inflating his value to at least ten times what could truthfully be underwritten) and naturally the discovery of this fact led the insurer to cancel the payout altogether by reason of fraud. Sometimes it is obvious what can go wrong, and sometimes it just takes a practiced mind to understand the issues that can arise. Regardless, never is a simple (or grand) legal mistake a worthy gift to your inheritors. If it is important enough to plan, then it is important enough and even necessary to plan well.
Reference: Forbes (May 13, 2014) “Legal Mistakes That Haunt After Death: Three Cases”