How to Strengthen Your Estate Plan to Minimize Litigation
There’s more to thoughtful and strategic planning than plugging in names and variables. It’s a process. There are a lot of moving parts.
Remember that planning involves probate, guardianship, estate, gift, income and GST tax, marriage, divorce, death, taxes (they are twice as bad), family dynamics, property interests, and other states laws. There are many parties, and it’s a lot to think through to get it right.
Strengthening the file to avoid contests and other litigation is an art and science. Like Farmer’s Insurance – having been doing this for over a decade – “we know a thing or two because we’ve seen a thing or two.” That helps us better protect clients from the unforeseeable risks that lie ahead. There are no guarantees, but we certainly help to mitigate that risk.
What Is Litigation – and Why Do You Want to Avoid It?
What exactly is litigation? It’s a term we’ve all heard, but how much to you really understand it?
That’s what I’m going to cover in my video below.
Read Transcript
Hi, thanks for stopping by for another dose of Bite-Sized Bits of Knowledge, where we give you meaningful information in a short amount of time. We just finished talking about the reasons people fail to plan and how we overcome some of those issues and the work we’re doing here to try to educate people from making the wrong decision based on misinformation or misunderstandings.
Today we’re going to talk about strengthening files and minimizing litigation. So let’s start with what the heck litigation is. We get it a lot. People don’t know. And we’re going to put upon ourselves to explain it.
I’ll do a much more comprehensive set of videos on litigation later. For now, let me boil down litigation for you. If you haven’t had the pleasure, it’s like a legal colonoscopy, okay? Basically, people think it’s like the movies where you kind of like you get to see the judge and there’s a decision and it’s quick, but that is like the furthest thing from the truth.
It’s more akin to, like, the old school movies where you have the 1700s type of warfare, where, like, this army lines up in just complete, vulnerable form with no obstructions and just fires at the other army that’s, like, 20-feet away that is also lined up just waiting to be killed in vulnerable, unobstructed form. And they just kind of take turns firing and just killing each other.
That’s kind of what it is. Each side has the opportunity to conduct discovery, to fire their missiles, to exhaust all of their rights and remedies. Discovery is a long process. I’ll get more into that in a moment. But discovery, basically, it means you have the right to get information. And it takes time. It could take a year, it could take six months. With every single discovery, the more contentious and litigious the parties are, they can start objecting to every little thing, every little column, every little word.
And that means there’s a hearing. There’s a hearing on that. And that means that there’s more time. And more time means more attorneys fees. And more attorneys fees means more money.
So you’re going to burn through money in litigation. You’re going to get to trial maybe in a long time after you spent a lot of money. It doesn’t take a lot of months of paying attorneys ten, $15,000 a month to really just become fatigued and want to stop doing this and start doing some settling.
Unfortunately, the statistics are – I should say fortunately – statistically, over 99% of litigation settle. So if your state ends up in litigation, you can rest assured that likely your beneficiaries are going to broker a deal that benefits the non-beneficiaries, because it’s just economically unsustainable. So that is truly tragic to see.
I’ve seen that where a person looks me in the eye, tells me exactly what they want to do and for circumstances outside of their control and our control, unscrupulous lawyers included, broker any result contrary to what the creator of the estate planning documents wanted. And pretty much, most of the time, it’s the product of waiting until it’s too late, doing it too late in the process.
You’re ill. The facts are bad. You didn’t have capacity, or you at least looked like you didn’t have capacity, or you had somebody dragging you around, taking care of you, that can be argued they forced you to do it.
And all it takes is bad facts. And so with all that that in mind, let me just for the sake of clarification, discovery means depositions, subpoenas requests for productive documents, interrogatories and admissions, and you just fire them away like those two armies. And it’s just a lot of paperwork and a lot of attorneys fees and a lot of money.
So now kind of transitioning to what we do, we anticipate what can happen. We understand where the risks are. We understand where the complications are going to come from, where are the missiles coming from, and we can help to strengthen our file to minimize that, because if it goes to litigation, you’re not going to be here to testify on your behalf. So we got to work on coming up with a plan that will work for you then.
So strengthening files, it does mean we charge more money for that because it takes time and effort and thought. But whatever costs are going to pay us to do that is well spent because the litigation costs can, like I said– Five, 10, $15,000 a month for a lot of months, it becomes very routine and regular to experience that. That’s exponentially more than what we’re going to charge.
So we want to help you minimize, like I said, the three C’s: court, costs, conflict. The more advanced planning you do, the more thoughtful planning you do, the more you’re going to minimize litigation. And litigation is inevitable in some cases where there are opportunities to prevent it. We’d really like to help you do that.
So I hope that you found this helpful. Thank you for stopping by and stay tuned for more.
Now that you understand litigation a bit better – and why you really don’t want to go through it if you can help it – let’s talk about some things you can do to minimize your chances.
Use These Strategies to “Just Say No” to Litigation
While nothing can completely eliminate the possibility of litigation, you can greatly minimize it with a strong plan. What does that mean, exactly? How do you make a plan “strong”?
Start Planning Early to Avoid “Lack of Capacity” Challenges
Far too many people put off estate planning. One of many problems with this is that doing so makes you much more vulnerable to challenges related to your “capacity.” In other words, arguments that you were “not of sound mind” when creating your plan.
Since questions about mental capacity tend to get worse as we age, one of the best ways to minimize these types of questions is to put your plan together when you are still young and healthy. People may not like the choices you made, but doing this will make it a lot harder for them to challenge those choices.
Protect as Much of Your Estate as Possible from Probate
Very little about probate is good in general, but probate litigation is particularly bad. One way to prevent it? Shrink the parts of your estate that have to go through probate.
How can you do this? By using various estate planning tools that allow those assets to bypass probate entirely. For example, jointly held assets do not go through probate. Likewise, anything that you put into trust can skip probate as well. These are just two of the many tools and strategies available.
Make Decisions on Advance Healthcare Directives
Florida has three planning documents available that enable you to make your end-of-life decisions known:
- Durable Powers of Attorney
- Designation of a Healthcare Surrogate
- Living Will
Essentially, the point of these documents is to have a plan in place for when you lose the ability to make health and financial decisions for yourself. As with general “lack of capacity” questions above, the earlier you complete these documents, the more you reduce the chance of someone challenging them using the argument that you didn’t know what you were doing. As a nice bonus, doing this in general avoids the need for the court to appoint a Conservator or Guardian.
Make Sure You Tell the Right People About Your Plans
You know what people hate? Being surprised with bad news. Or even just news that will change their life in some big way. Because of this, it is absolutely vital that you share your estate plan with key family members, beneficiaries, and others who may have a vested interest in your affairs.
Even if you are telling someone something they don’t want to hear, being open and honest about it can reduce the possibility of them challenging your wishes. It may not be a fun conversation, but they’ll have a far harder time arguing that you didn’t understand what you were doing – or that you were unduly influenced if tell them directly what you’re doing and why.
Put the Plan in the Hands of Your Professionals
While certain parts of your estate plan should remain private, things like your powers of attorney and beneficiary designations should be sent to:
- All agents, healthcare surrogates, personal representatives, and powers of attorney named in the respective document
- Financial institutions (such as bank or credit unions) and professionals (accountants, financial advisors, stock brokers)
- Medical providers (including your preferred hospital)
- Your attorney (they should have a copy of the entire plan)
Don’t Forget to Revisit the Plan
Your life isn’t static, so your estate plan shouldn’t be either. Take a look every few years to make changes that account for births, deaths, marriages, divorces, and any property or other assets that you might have purchased or sold since the last update.
Another thing to pay attention to: legal changes. When laws are rewritten, it can impact your plan in both positive and negative ways, so it’s wise to take a look regularly.
How regularly? We recommend revisiting the plan every 3-5 years and/or every time there’s a birth, death, marriage, or divorce.
Want to Talk More about Avoiding Estate Litigation? Reach Out
Perhaps the best way to make sure your estate planning files are as strong as possible is to work with a knowledgeable and trusted Florida attorney. Get in touch today to get started!
Originally published 08/19/2021. Updated 03/26/2024.
Author:
Barry E. Haimo, Esq.
Haimo Law
Strategic Planning With Purpose®
Email: barry@haimolaw.com
YouTube: http://www.youtube.com/user/haimolawtv
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