Thursday, October 2, 2008

Its now Today Instead of Tomorrow or Yesterday, so. ..

And now for more fun with dead people’s stuff. . . .

If you do not own animals and you die with no plan, no will and no trust, the worst that can happen is that your property loses value and somebody has to pay too much in taxes. Not the end of the world. It won’t bother you because you are dead. It may turn your family against one another or valuable property might be overlooked, but frankly, stuff loses its appeal once you are dead. Stuff is much more fun when you are alive to enjoy it and stuff doesn’t really care if its valued or not. Animals, on the other hand, do care what happens to them after you are gone.

Under the law, dying without an estate plan (will, trust etc) means your property will be divvied up according to state laws on intestacy. These laws vary by state, but the general scheme of things is that a group of relatives like your spouse, children, parents, or siblings and their heirs will get some pre-set portion of your stuff. The court will appoint an attorney or executor or administrator to decide who gets what, but the monetary values must be somewhat equal to the statutory requirements.

Your sister might be willing to forgo a tiny bit of your stocks in order to take home your prized Fiesta Ware collection and your wife may want your high school photo album in addition to the 6,000 shares stock, but none of this is up to you. Your lack of planning has made it a free for all for personal property and someone else will decide how to equally divide up anything of value. This person does not care what your wishes were. Even if they know you wanted all your worldly possessions to go to your brother, it does not matter. Its decided by the probate code of your state. You had a chance to control the estate and you didn’t bother.

This process will take about a year, sometimes more and sometimes less, but the probate court will be supervising your estate for a long time. Now think about your pets, your horses and your cats and dogs and birds. Can a horse be divided up equally among several parties? Do you trust your mother to care for your dog the way you want? Can you be sure anyone wants your animals or can afford to pay the incredible expense of keeping them happy and healthy? Breaking up the Fiesta Ware collection is sad, but having your horse dumped off at auction so the proceeds can be distributed is tragic.

I know, you think your loved ones would respect your animals as part of your family. They may even be true, but as costs for keeping animals rise at an incredible rate, it just may not be an option to expect your sister to pay board on your horse instead of buying health insurance for her kids. That’s not a gift, that’s a curse. And sadly, the Estates case books are full of the reality of greed. Animals are expensive and not always wanted by others.

Spot the Jack Russell may have been the apple of your eye, but nobody else may want the furniture eating, constantly yapping, ankle-biting pet you left behind. They can put him down as soon as your body is lowered into the ground. Its not like they have to look you in the eye after they do it. Or worse, you leave behind a horse. Your estate may be tied up in probate for a year while nobody knows who is to care for the horse or pay the board bills. You didn’t leave any money to pay for that. No matter how much you were loved in life, just one horse is too much to dump on your loved ones after your death. On average, right now, decent board for 1 horse is going to cost more then $5,000 a year. Who pays for that? Which interstate share is reduced for Dobbin’s expenses? How long before the courts can get the money flowing out of your estate and into the barn owners hands?

Lets try and example: Cindy Saver dies leaving no will and 4 dogs, 2 horses and a goat. She is survived by her father, an elderly gentleman of advanced years, and her 2 sisters, Sally and Betty. She owns a house in one state and an apartment in the mountains for summer retreats. She owns two houses full of nice furniture, some art work and a few semi-valuable antiques. In addition, she has $60,000 in savings.

The dogs are show dogs and are fairly young and healthy. They have a market value of about $2,000 each and there is a ready supply of buyers who would love to have them. The horses are old and somewhat creaky. One is lame and the other is sound, but has a history of bucking people off for his own amusement. They are worth only the auction price a meat man would pay and there is no ready market of takers for pasture ornaments because of a long standing drought and economic uncertainty. They cost $600 a month to support. Nobody knows anything about the goat; It just showed up one day and appears to be pretty useless for anything but making Cindy laugh.

Cindy was a resident in the State of Denial. That state’s intestacy statute says the parents get ½ of the estate and each sibling gets an equal share of the remainder. Nobody wants the horses and everybody wants the dogs. Father says he is too old and poor to care for two horses. He forgot that he now has the proceeds of ½ the estate to help defray the costs. Betty says she can’t have horses because she lives in the city. The horses have by this time racked up $4,500 in expenses. Cindy left a lot of money to her heirs in her estate, but nobody wants to use their share for the horses board and upkeep. Sally, always the closest to Cindy, says that Cindy would have wanted the estate funds to help pay for the care and upkeep of the animals she left behind. Unfortunately, Sally’s husband says if nobody else is going to kick in for the cost of keeping the horses its not fair for Sally to use all her share.The only fair solution is for the horses to be sold or given away.

Although Sally feels bad about her role, the family decides to advertise the horses on Creigslist to find them a good home. As luck would have it, there is an ad there already saying “All farm animals wanted. Will pick up and give good home. Will pay $50” None of Cindy’s family know anything about horses so they happily call Farmer X who offers to keep the horses forever and even includes the goat. The executor of Cindy’s estate is happy because a liability just turned into an easily dividable asset. Nobody pays the back board owed.

Sandy, Cindy’s best friend comes running in to say “No! Cindy said I should care for her horses if anything were ever to happen to her” but by this time the horses are already gone. Sandy even shows a written document by Cindy saying “I want Sandy to have my horses if I die” but the executor and the probate judge ignore it because it is not a will and did not follow the proper formalities. Everyone agrees its probably what Cindy wanted, but the Law gave Cindy clear instructions on how to write a will and how to plan for her estate and the judge cannot come in and fill in his opinions to replace the lack of a properly executed will.

Both horses and the goat end up at a low-end auction a few days later. Sandy wants to go to court and make Farmer X give the horses back, but she finds out it will cost her $20,000 in legal fees to try and undo the sale on the grounds he did not provide a good home as advertised. Cindy’s family wont foot the legal bills either, even though each person got $20,000 of Cindy’s cash. The horses end up in a place we will not discuss, but it was probably not where Cindy wanted them to go.

3 months after the probate is wrapped up Betty loses her job. Betty took all 4 dogs because she really loves them and she knows that’s what Cindy wanted. However, after a few months of living on the dole, Betty decides to sell all 4 dogs for the $8,000 Peter Puppymill has offered her. She let Sally have the artwork so she feels entitled to the dogs and all the proceeds the dogs can bring her. Father gets upset and sends Betty $8,000 so she wont have to sell the dogs. She sells them anyway and keeps the money.

Now Betty and Father are not speaking to each other, Sally is trying to patch things up but she is pretty mad at Father for not helping support the horses and at Betty for selling the dogs. The following Thanksgiving the remaining family members gather and all hell breaks lose. Each family member blames the other for doing what Cindy would not have wanted with her animals and somehow Betty and Sally end up arguing about who stole who’s My Pretty Pony when they were children and how the other never cared about Cindy anyway. Father gets so upset he has a massive heart attack.

Cindy, who is still dead and will remain that way, did manage to never have to think about her mortality and did save several hundred, perhaps even several thousand dollars in estate planning. Neither the dead horses, the dead goat , the tragic fate of the dogs or her families distress are her problem at all. She doesn’t care. She doesn’t have to see any of this take place. Sandy still cries about the horses she promised to care for. Sandy writes a will and gets a trust for her animals. At least something good came out of so much bad.

Now don’t get all depressed because over the next few posts you can learn all kinds of nice way to avoid all this!

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