Contingency and Disaster Planning: Ensuring your estate doesn’t end up with the state
Article published in Northampton Living
(August 2024)
EXPERT CONTRIBUTOR
Claire Crowley & Ben Palkowski
Estate Planning Attorneys
Old Colony Law
413 387 0080
oldcolonylaw.com
The primary purpose of an estate plan is to give legal effect to your wishes regarding the distribution of your assets upon your death. This is important because if you fail to make an estate plan, you leave it to the Commonwealth to decide how to distribute your estate.
The state’s distribution scheme looks to your family tree, which can yield unexpected and surprising results, particularly for blended families and those with personal relationships that are not recognized by the law.
Under the state’s distribution scheme, if you have a spouse, then your spouse will be entitled to at least some – but not necessarily all – of your estate. If you have neither a spouse, children nor surviving parents, then the heirs to your estate under the Commonwealth’s rules can become increasingly unpredictable and may even end up being the Commonwealth itself!
Contingency Estate Planning
Even if you have a will or trust, planning gaps could still render it necessary for your estate to be distributed according to the government’s default rules. That’s why we typically urge our clients to consider identifying contingent beneficiaries to their estate. A contingent beneficiary is a beneficiary who stands in place of a primary beneficiary if the distribution to the primary beneficiary fails for some reason.
To illustrate this, let’s examine an unfortunate but not uncommon scenario. Suppose you leave your estate in equal shares to your 3 children, but one of your children later predeceases you. What should happen?
Should your estate then be divided between your two surviving children? Or should your deceased child’s share be distributed in a different manner? Would your opinion of your deceased child’s spouse impact your decision? What if your deceased child had children of their own? Would the fact that the child is a stepchild or an adopted child have any bearing on your decision?
Contingency estate planning can factor your family’s unique dynamics and personal preferences into the equation, while taking the government’s distribution rules out of the equation. Having a contingent beneficiary as a backup for every primary beneficiary in your estate plan can help ensure that you do not relinquish control over the distribution of your assets to the state.
Disaster Estate Planning
A more uncommon but practical example that further demonstrates the need for comprehensive planning is where an entire immediate family is wiped out in a catastrophic disaster like an extreme weather event, terrorist attack or place crash.
By incorporating a disaster provision into your estate documents, you can dictate what should happen in the event you, your primary beneficiaries and your contingent beneficiaries all die in a common incident. Again, without legal planning directing otherwise, the state’s default rules will apply.
Most of our clients cringe at any possibility of an unknown distant cousin or the Commonwealth ultimately becoming the heir to their estate, no matter how unlikely or remote that possibility may be. Accordingly, we often suggest to our clients that they name a charitable organization to be a beneficiary of last resort. Whatever you decide, we are here to answer your estate-related questions and provide reassuring answers.
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