Estate Planning When You Have No Money

Feeling a need to set up your estate plan, but currently short on the cash needed to pay an attorney? What are your options? 

This particular topic is difficult to give advice on without knowing your specific set of circumstances. If you want to know your options, please talk to an estate planning attorney. I give free consultations where we can talk about your specific situation and then determine what your options are. Please do not take any of the advice in this article without first discussing your specific situation with an attorney.

If you do come to my office, what are some options I might suggest when you are short on money? 

Option 1: Do nothing.

This option initially appears to be a bad thing, but depending on your situation, it may be your best option when you feel you can’t afford a Trust. If you do nothing, then at your death, your surviving spouse and then your children will have the responsibility to hire an attorney to handle Probate Court as needed. If you don’t own a home, or have more than 4 vehicles worth over $100,000, or have more than $100,000 total in the bank, then Probate might not even be necessary. (Please verify this with an attorney.)

If your surviving spouse is the parent of your children, then the court will give everything to your spouse. If your surviving spouse is not the parent of your children, the court will give them a significant portion of the estate and then leave the remainder to your children. If you have no surviving spouse the court will give everything to your children. 

Sometimes doing nothing, even when probate is necessary, will do the least damage. I have seen cases where someone wanted to do something, but they did not feel they could afford a Trust. They took the advice of a friend and signed a deed placing their home in their name with one or more of their children as joint tenants. When the parent dies, the children will own the property. PLEASE DO NOT DO THIS! I have only encountered one situation where this worked properly. Normally, it will do more harm than good. During your lifetime, your children and their creditors will have the ability to force the sale of your home to collect their share. But even worse for your children, after your death when they try to sell your home, they will owe capital gains taxes that will be 20% of the increase in value of your home from the date you purchased it. This mistake might cost them tens of thousands of dollars in taxes that would have been avoided with a Trust or Probate.

Option 2: Write a will.

In Utah, state law allows you to make your own will for free if you choose to. This is often referred to as a “holographic will”. Holographic wills don’t require witnesses. To make one, you simply write out your wishes by hand and sign the will. Adding a date will give the will priority over past wills, and allow any future wills to have priority over the holographic will.

Why Use a Holographic Will? The main purpose of a will is to cause something to happen after you pass away. The more a person matters to you, the more you will want to prepare to make sure that person receives your gift. If you are not greatly concerned whether your wishes expressed in a will happen, a holographic will may be enough. If you have strong wishes, but no opportunity to retain an attorney, a holographic will may be your only option.

In spite of being legal, holographic wills have many limitations. If there is a dispute over property, and one of the parties claims your holographic will is a fake, there may be no witnesses that this will was written by you. The court would be forced to find examples of your handwriting, which may not exist if you normally use texts or email to communicate. The will may get lost, or if found, it might not be recognized as a will. Sometimes the person who does find the will chooses not to tell anyone.

Option 3: Sign a Health Care Directive.

If you go to an attorney, they can help you understand the details of a Health Care Directive, but if you can’t afford an attorney, you can try filling it out yourself. The hospital will give you one of these forms for free. 

This document will allow you to choose one or more agents that have the authority to speak for you when you are unable to speak for yourself. You can choose how much power to give them, and they will use that power to hire and fire doctors, choose your hospital, put you on life support, “pull the plug,” etc. If you don’t sign a health care directive, your hospital will ask your present family what you want to do and then accept a group consensus. 

If you were watching the news closely 25 years ago, there was a woman named Terri Schiavo that become popular when she had a heart attack and lost nearly all of her brain activity. Her husband could not find physicians that could restore her capacity and he was told she was effectively brain dead. Mr. Schiavo then went to court and obtained a guardianship over his wife. He then used his power as guardian to have her life support terminated. At this point, her parents became involved and they disagreed with the doctors and Mr. Schiavo’s plans. Terri Schiavo’s life support was then restarted. This battle then went on for over a decade in the courts. The Florida state legislature got involved and passed a law to allow Terri to remain on life support. This law was fought over in state and federal courts and was even appealed to the US Supreme Court. The US congress got involved and even the President of the United States stepped in. The battle eventually ended after several years and the life support was removed and Terri died. 

All of that trouble and fighting happened because Terri had never signed a Health Care Directive. If she had, she likely would have named her husband, and his initial plans would have happened without the court battles. You have the ability to choose your agent today that you trust and keep your health care issues private and out of the courts.

Option 4: Go to the bank and name beneficiaries for your bank accounts.

This costs nothing. All you do is decide who you want to have the money in your bank account when you die. Then you tell the bank. They will have you sign a Pay on Death Beneficiary form.

Option 5: Make someone a co-owner of your vehicles titles and other accounts.

This option can be very risky, as your assets are now partly owned by someone else, and their creditors can take half your asset to pay off the debts of the person you added to your title or account. The one benefit is that the person you name as a co-owner will automatically inherit the item at your death. This option is normally only a good idea for married couples.

Again, please do not take any of the advice in this article without first discussing your specific situation with an attorney. In most cases, you will find that setting up a Will and Trust will solve many problems and save your heirs significant time and money.

Give us a call and talk for free or visit us on Facebook! With over 15 years of experience in Estate Planning, I can help you overcome any barriers to having all of your wishes carried out. What you don’t know definitely can hurt your estate plans. Let us make the difference.

Ken Prigmore
Ken Prigmore
Ken has been a Utah attorney since 2006. With many years of experience in handling Wills, Trusts, and Probate, Ken can help his clients avoid probate and pass on assets to their children without any courtroom drama. Ken is happy to educate others on the pitfalls of estate planning. "It doesn't matter what you know about Wills and Trusts, it's what you don't know that's going to hurt you and your family." When away from the office, Ken likes to spend time with his family.

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