As you are hearing quite frequently now, the best estate plan is a living trust. But what happens when there is no estate plan at all? Recent studies by the American Bar Association have shown that over 70 percent of all Americans who need one do not have an estate plan. Let's look at what happens to Bob, his wife Sue, and their minor children when Bob, at age 39 suddenly dies in a car accident but did not bother to provide for his family with a properly drafted estate plan.

Since someone has to collect Bob's real and personal property, and pay his debts the Probate Court may appoint any of his relatives as administrator of the estate who asks for the job. If no one asks, one of Bob's creditors may ask so the creditor can then sue Bob's estate in Probate Court to get paid. The Probate Court will require a performance bond be posted in double the amount of Bob's personal property (including all financial assets) to ensure that the administrator does not steal from the estate and that he does everything properly. Bob's estate will have to pay for this, which is a needless and very high expense to Bob's family. Bob's administrator can request to be paid for his services and the Probate Court will require it. Bob's administrator can choose the attorney of his choice to assist him and there is NO statutory limitation as to how much the attorney can charge. Bob's administrator can choose to, or may have to, sell his real property to pay his debts, but he will have to first file a lawsuit against Sue and the children, to get the permission of the Probate Court, even though everyone agrees that the property should be sold.

If Bob's estate files a lawsuit against the other driver of the car that killed Bob, the Probate Court will take over control of the lawsuit and decide what attorney can represent Bob's estate in the case, how much the attorney will be paid, and what amount can be settled for from the other driver's insurance company instead of taking the case to trial. The Probate Court will also require that it has full and continuing control over the proceeds of any award from the settlement or trial.

The Probate Court will award Sue the first $60,000, the car, the home rent free for only one year, and only one-third of the remainder of the estate. The children will receive the remaining two-thirds of the balance but under the control of the Probate Court until they reach eighteen. If some person shows up and convinces the Probate Court he is Bob's illegitimate child, he can inherit from Bob's estate and dilute how much Bob's legitimate children will take.

The Probate Court will probably appoint Sue as guardian of the children, but it will require her to report to it regularly and account for every single penny she spent on them. The Probate Court will tell her where she can invest the money and such investments are generally required to be in very low yielding certificates of deposit instead of safer, higher yielding investments. If Sue dies soon after Bob from the same car accident without her own estate plan, the Probate Court will order other relatives to decide on the guardianship of the children. If these relatives cannot agree on a suitable guardian, the Probate Court will do so and will be free to impose a social worker or anyone else as guardian of the children. The Probate Court will also require an expensive performance bond paid for out of the children's share to be posted by the guardian to guarantee she does not steal from the children and to be sure she does what the Probate Court tells her to do. This needless expense will be repeated each of the first eighteen years of each child's life.

At eighteen, the children have the right to hire an attorney to demand that Sue provides a complete accounting of all her financial actions with the children's money. Also, at eighteen the children have the right to withdraw and spend their share of the estate in any way they please and no one will have the right to question their actions.

Should Sue remarry, the Probate Court guarantees that her second husband will get one-third of everything that Sue inherited from Bob. This new husband is not required to spend any part of "his" share on the children and he may also exclude the children from "his" share of Sue's estate, by merely writing an estate plan to that effect. He could even leave it to his children instead of Bob and Sue's.

There are certain legitimate ways to lower the death taxes, but instead the State and Federal Government will get the money that otherwise would have gone to Sue and the children, as a result of these savings. This amount could reach into hundreds of thousands of dollars.

The horror story that you just read is very real and is required by Ohio law. By reading the Probate Court's estate plan for Bob you can easily see the emotional consequences of his failure to set up a proper estate plan but what would be the estimated financial consequences? The unfortunate answer is anywhere from a "low" cost of $50,000 to $500,000 or more because of the probate fees, attorney's fees, administrator's fees, appraiser's fees, realtor's fees, guardian's fees, and estate taxes. If you are like Bob or know someone like him, a well drafted estate plan should be considered to prevent the misery and expense that was described here.