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Is any estate plan better than no estate plan?
dan • Aug 23, 2022
It is not unusual for the estate planning process to bring up difficult questions that people would rather avoid thinking about. Questions about what should happen when kids do not get along with one another. Or what should be done when one kid is clearly more capable than the other. Or whether an equal distribution is fair when one kid needs more help. Or when one kid has provided more end-of-life help than the other.
Every once in awhile, a client will suggest effectively tabling these difficult questions and just getting something in place for now. Then they will get back to it at some unspecified time. The theory is that any plan is better than no plan. But is that true?
The short answer is no, a bad estate plan can absolutely make things worse than if there had not been a plan. The sad reality is that every contested and difficult probate in which we have been involved has had a will underlying it, most of them drafted by lawyers. The problems have rarely been the result of technical deficiencies. The will in question was drafted and executed correctly. The problem is the content of the plan.
What makes a plan bad? There are several common threads that we see.
Every once in awhile, a client will suggest effectively tabling these difficult questions and just getting something in place for now. Then they will get back to it at some unspecified time. The theory is that any plan is better than no plan. But is that true?
The short answer is no, a bad estate plan can absolutely make things worse than if there had not been a plan. The sad reality is that every contested and difficult probate in which we have been involved has had a will underlying it, most of them drafted by lawyers. The problems have rarely been the result of technical deficiencies. The will in question was drafted and executed correctly. The problem is the content of the plan.
What makes a plan bad? There are several common threads that we see.
out of date plan
People badly underestimate how fast time passes, how much about their life changes over short periods of time, and how often laws relevant to estate planning change. You might think that all your estate plan does is divide assets equally between kids and that nothing has changed about that since you last thought about it. But even if you think your plan is that straightforward, consider the following questions. Ten years ago:
Even in the unlikely event that your answer to the above questions is that nothing has really changed in your personal life, the laws have changed dramatically. Ten years ago, there was no estate tax (congratulations Steinbrenner family on your tax free transfer of the Yankees!), but people were planning around the expectation that a relatively low estate tax threshold was going to be resurrected in 2013. As it turns out, although the estate tax did come back in 2013, it was only for estates that exceed $5 million in value. And for the first time, married couples could combine their exemption amounts, meaning they could give away a combined $10 million, estate tax free. 10 years before that, when that threshold was only $600,000 and couples could not combine, estates commonly owed estate tax. Going forward, only a small percentage would.
Then in 2017, that amount was doubled. With adjustments for inflation, the amount single people can give away in 2022 in $12.06 million. Married couples can give away $24.12 million, estate tax free. At the moment, almost no one has an estate tax problem.
Yet, we are still encountering plans that have complex planning to avoid an estate tax that the planner does not need to avoid anymore. Sometimes, this is just inconvenient. In some circumstances, these outdated plans are creating problems that go far beyond inconvenience. Some plans, for example, have inadvertently disinherited the surviving spouse by sending money directly to kids (or, worse yet, stepkids) to try to avoid a tax that is no longer due!
- Were you living in the same place you are now?
- Did you spend your time with the same people with whom you spend your time now?
- Did you use the same banks and financial institutions, and have all the same accounts, for financial management?
- Were your and your kids’ marital statuses the same?
- Did you have all the same family members, or have their been births or deaths since then?
- Do your kids have the same financial capabilities and challenges that they used to have?
Even in the unlikely event that your answer to the above questions is that nothing has really changed in your personal life, the laws have changed dramatically. Ten years ago, there was no estate tax (congratulations Steinbrenner family on your tax free transfer of the Yankees!), but people were planning around the expectation that a relatively low estate tax threshold was going to be resurrected in 2013. As it turns out, although the estate tax did come back in 2013, it was only for estates that exceed $5 million in value. And for the first time, married couples could combine their exemption amounts, meaning they could give away a combined $10 million, estate tax free. 10 years before that, when that threshold was only $600,000 and couples could not combine, estates commonly owed estate tax. Going forward, only a small percentage would.
Then in 2017, that amount was doubled. With adjustments for inflation, the amount single people can give away in 2022 in $12.06 million. Married couples can give away $24.12 million, estate tax free. At the moment, almost no one has an estate tax problem.
Yet, we are still encountering plans that have complex planning to avoid an estate tax that the planner does not need to avoid anymore. Sometimes, this is just inconvenient. In some circumstances, these outdated plans are creating problems that go far beyond inconvenience. Some plans, for example, have inadvertently disinherited the surviving spouse by sending money directly to kids (or, worse yet, stepkids) to try to avoid a tax that is no longer due!
wrong person in charge
People also badly underestimate the complexities involved with administering even a modest estate. The administration of most estates involves a mix of probate law, trust law, real estate law, tax law, and family law. On top of all those legal complexities are the human complexities of jealousy, greed, grief, and impatience. Liquidating and slicing up your own estate would probably be a challenging thing to do. Imagine trying to step in and liquidate someone else’s.
Because people underestimate the complexity of the job, they typically just appoint a close family member to do it. But just because someone is close to you does not mean they have the ability to handle the issues described above, deal with difficult family members, and stay organized. My advice to clients who we are assisting with planning is to focus on selecting the right people for the various jobs that need to be filled. That tends to be more important than the exact instructions you give them (although those are also critically important). A person with the right skills will probably do fine, even with less than perfect instructions. A person who lacks the necessary skills will struggle, even with highly detailed instructions.
Because people underestimate the complexity of the job, they typically just appoint a close family member to do it. But just because someone is close to you does not mean they have the ability to handle the issues described above, deal with difficult family members, and stay organized. My advice to clients who we are assisting with planning is to focus on selecting the right people for the various jobs that need to be filled. That tends to be more important than the exact instructions you give them (although those are also critically important). A person with the right skills will probably do fine, even with less than perfect instructions. A person who lacks the necessary skills will struggle, even with highly detailed instructions.
lack of liquidity
You might think that a smaller estate is easier to administer than a bigger estate. This is not necessarily true. The hardest estates to administer are ones that don’t contain a lot of cash, which can be a prolem in any estate, big or small. We have seen estates where the only asset of any significance is a modest home. The problem is that the personal representative can pay the estate's bills with a modest home. He or she can’t split the home into pieces if multiple beneficiaries want it. Even with a will that specifies who should get what, you have little room to maneuver if any dispute or unexpected need for funds arises.
These challenges can surface in bigger estates too. Even when there are millions of dollars of assets, it is not necessarily helpful if those millions of dollars are tied up in commercial real estate or a closely held business.
These challenges can surface in bigger estates too. Even when there are millions of dollars of assets, it is not necessarily helpful if those millions of dollars are tied up in commercial real estate or a closely held business.
family that disagrees with the plan
You may think your plan is great. The plan, however, is not for you. And if the people who are affected by it don’t agree with it, that can still cause problems. You may think that children of a decedent could only get upset about an unequal distribution. But even if an instructions to divide things equally can cause problems. The first problem is that it is not always easy to equally divide things, especially when the assets include substantial personal property or other difficult to value assets, such as business interests or unique real estate.
The second problem is that the children may not view their siblings as worthy of receiving equal distributions. We most often see this come up in situations where one child was living with, and assisting, elderly parents prior to their deaths. That child frequently feels as though they are owed more for the service they provided. They also often feel as though they sacrificed their own careers and happiness to do that. Whether that sounds reasonable to you, the other children never agree. They view the sibling who was living with the parents as having received free housing and support for years, and actually think that they should receive less!
Don’t assume that your children can’t fight over an equal distribution.
The second problem is that the children may not view their siblings as worthy of receiving equal distributions. We most often see this come up in situations where one child was living with, and assisting, elderly parents prior to their deaths. That child frequently feels as though they are owed more for the service they provided. They also often feel as though they sacrificed their own careers and happiness to do that. Whether that sounds reasonable to you, the other children never agree. They view the sibling who was living with the parents as having received free housing and support for years, and actually think that they should receive less!
Don’t assume that your children can’t fight over an equal distribution.
You don't just need a plan. you need a good plan.
The moral of the story is that putting a plan in place is not necessarily helpful if the plan doesn’t honestly account for your family. In fact, it can make things worse. Before you start tinkering with your plan, it is critical that you understand what various jobs need to be filled, what those people will need to do, and your options you have concerning how to instruct them. If you never been through an estate administration, planning for one can end up giving you a false sense of security. If you have decided to "just get something in place for now," proceed with caution.
What next?
If you think it might be time to think through your estate plan, you can:

- Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
- Visit our estate planning page to learn more about how proactively thinking through your estate plan can protect you and your family, minimize hassle, lower the chance of family discord, and minimize or eliminate taxes.
- Learn more by reading our blog or watching our videos .
The Probate Process in Colorado
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If you have recently lost a loved one, you might find yourself participating in a probate process, either as the executor or a beneficiary. Learn more about what to expect from that process here.
One of the most common questions we receive is whether or not to share the details of an estate plan with adult children. This decision is personal and can have far-reaching implications for the individual and their family. The Benefits of Sharing Your Estate Plan Sharing your estate plan with your adult children can be beneficial. Doing so allows the family to discuss the plan's details, including what needs to be done in the event of incapacity or death. This open communication can help set expectations and facilitate a smooth estate administration process. A discrepancy between the plan and what the family expected is one of the most significant sources of tension and difficulty during the estate administration. It can be helpful to identify and resolve the discrepancy while the person who can change the plan can either still do so or explain why they designed the plan the way they did. Our firm generally recommends communication with fiduciaries and beneficiaries about the plan. However, communication does not necessarily mean sharing the complete draft of the estate plan. The Risks of Sharing Your Estate Plan While there are benefits to sharing your estate plan, there are also potential drawbacks. One of the main concerns is that sharing the estate plan can create difficulties if the plan is changed after it has been shared. This can be particularly problematic if any of the beneficiaries of a previous plan will receive less from the new plan. Another risk is the possibility of inconsistent plan drafts circulating after death. This can lead to confusion and potential disputes among beneficiaries. Suggestions for Communicating Your Estate Plan Given these considerations, here are some suggestions on how to best communicate the details of your estate plan: Maintain a Record : Record what has been shared, who it has been shared with, and when it was shared. This can help ensure everyone is on the same page and minimize potential misunderstandings. Share Digital Copies : Consider sharing digital copies of your estate plan, accompanied by a cover letter or mark reminding everyone that the plan can change. This can help mitigate the risk of outdated drafts circulating. Provide a Summary : Instead of sharing the entire plan, consider providing a summary. This can give your family a general idea of your intentions without divulging all the specifics. Again, include a disclaimer that the plan can change. Remember, every situation is unique, and what works for one family may not work for another. It’s essential to weigh the benefits and risks before sharing your estate plan. As always, we’re here to help guide you through this process. Please note that this blog post is intended for informational purposes only and does not constitute legal advice. Always consult a qualified estate planning attorney for advice on your situation.
If you are unhappy with the terms of a will, you may have the right to challenge it in court. However, contesting a will is not easy and requires certain legal grounds and procedures. This blog post explains the basics of how to contest a will in Colorado, including who can do it, what reasons are valid, and what steps are involved.
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Discover the straightforward steps to initiate an informal probate process in Colorado with our concise guide. Learn what information is required for the application, including personal details of the decedent and your connection to the estate. Understand the importance of meeting the time limits for filing and find out how to navigate the process without a court hearing, all explained in simple terms. Ensure a smooth probate journey with our expert insights on Section 15-12-301 of the Colorado Probate Code.
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