Vanilla

Mar 26, 2021

Print Share

Estate Planning Horror Stories: 5 nightmare scenarios that will scare you into action

Most ghost stories are about unfinished business. Whether it’s a spooky campfire tale or a literary classic from the dark imagination of Edgar Allen Poe, a horror story plotline remains the same: the spirits of the departed haunt the living because there’s an unresolved matter preventing the deceased from moving on.

So what does all of this have to do with estate planning?

A poorly made or forgotten-about estate plan is like a ghost: It leaves your client and their loved ones vulnerable to hauntings of the financial kind. When people in mourning have to deal with their deceased relative’s unfinished business, legal entanglements, and complicated tax bills, it makes the grieving process harder. No one can move on.

We’re going to tell you five tales of estate planning terror that, as a financial advisor, you have the power to help your clients avoid. Be warned: They aren’t for the faint of heart. But they are lessons in what happens when you let estate planning fall by the wayside.

The case of the missing documents

Core estate planning documents exist to make a client’s wishes clear while detailing a plan of action. The lack of a will or estate documents will send your client’s family down a hellish legal spiral as they try to untangle assets.

Take the case of media legend Larry King.

The broadcasting superstar died on January 23, 2021, leaving behind a $2 million estate and, according to Law and Crime, “one colossal legal battle over his last will and testament.”

That’s because in October of 2019 (two years before his death), King wrote the following letter:

‘This is my Last Will & Testament. It should replace all previous writings. In the event of my death, any day after the above date I want 100% of my funds to be divided equally among my children Andy, Chaia, Larry Jr Chance & Cannon.’

— LARRY KING

In the state of California, informal letters can count as wills, but not always. Because King had unfinished legal proceedings and had failed to designate an executor for the estate, King’s letter raises unanswered questions:

• If the letter is deemed a legal document, who should administer the estate? As the eldest remaining child, Larry King Jr. claims that he is in charge. But there are no documents in King Sr.’s handwriting indicating that should be the case.

• Two of King’s oldest children, Chaia King, 51, and Andy King, 65, both died in 2020—a year after King wrote the letter. Who gets their portion of the inheritance? The remaining siblings or Chaia and Andy’s heirs?

• If Larry King Jr. is in charge, who will call in his debt? King Jr. borrowed almost a quarter-million dollars against his portion of the estate while his father was alive, which means there may be a conflict of interest when it comes to distributing the inheritance to his siblings (and possibly his deceased siblings’ heirs).

• What about King’s seventh and soon-to-be-ex wife? When he died, King Sr. was in the process of divorcing Shawn King, his wife of 22 years. King had named Shawn the executor of his estate in his 2015 will. Shawn now insists the 2019 letter isn’t a legal document because it was written after King had a stroke, and he wasn’t mentally competent to make a binding decision.

Now the wife and the eldest son have locked horns over who should be in charge of the estate and who should get what. The court case could go on for years and could end up costing the King family a significant chunk of the estate they’re feuding over.

The twisted irony of this terrifying tale is that King left the letter to make his wishes clear—but the lack of formal estate planning documents undermined his intentions.

The lesson for financial advisors

As their financial advisor, you have every reason to talk with your clients about what’s changing in their lives. If you discover a major change, such as a medical condition or a divorce, have your client review their estate plan with an attorney to determine if documents are missing. You never know what kind of tragedy the absence of a single core document could lead to.

To make advising for these major changes in life easier, Vanilla helps generate opportunities, like the ones mentioned above, based on your client’s existing planning and presents them in an easy-to-understand report. To see more examples of opportunities, download a sample report below.