I had a causal conversation with one of my clients the other day.  We met by chance at the gas station of all places.  After exchanging pleasantries for a few moments, I asked him how long it had been since I helped him with his estate planning.  He didn't know exactly, but he thought it must have been three or four years. 

Not one to miss an opportunity, I told him he ought to come in just to make sure everything was still up to date.  His response was, "Michael, I don't think there's any reason to.  My investments have gone South, my house is under water, and I don't think I'm going to have anything left to retire on, let alone worry about when I die."

I told him that I would get out his documents when I got back to the office and see if everything looked alright.  With that, we said goodbye and headed off in different directions.

I understood what he was saying.  It's a difficult time for many people and it's hard to argue with anyone who's struggling to make ends meet.  My client, Jim, was not really in that position, but he felt the pressure of knowing that his future wasn't nearly as rosy as it was a few months ago.

I did get out a copy of Jim's will when I got back to the office.  It seemed like everything was in order, except for one thing.  Jim's wife had died about 10 years earlier, so he wanted to leave everything to his two daughters.  Both were adults, educated, and doing well.  One daughter worked with Jim in his fast-food business; the other lived across the country and worked at home raising three young kids.  

Since Jim's daughter worked with him in his fast-food business, he wanted that daughter to get the business upon his death, and he wanted to leave everything else to his other daughter.  When he made this plan three or four years ago, each daughter was getting approximately the same dollar amount. 

Now, however, things had changed.  I wasn't sure exactly, but I knew that Jim's fast-food business had really taken off in the last few years, especially because the recession was causing people to spend their money at fast-food places instead of the more upscale restaurants.  And, in the few moments I spent with Jim at the gas station, I learned that his other assets had taken a big hit.  What was intended as an equal distribution to his two daughters, now seemed to be seriously skewed.  

But that wasn't all.  I noticed that Jim's will made a specific gift of the business to the one daughter and the other daughter got what was left; i.e., the residue.  Unfortunately, the will was written so that all of Jim's last debts, the expenses of settling his estate, and any taxes owed by his estate would come out of the residue, not the specific gift of the business.  A very rough and quick calculation on my part revealed that one of Jim's daughters would be getting a very lucrative and valuable business while the other would get almost nothing after paying all the debts, expenses and taxes.

I got in touch with Jim and insisted that he come in to correct this situation.  Jim loved both his daughters the same, and I knew he'd want to change this right away.  It's funny to think, though, that a shrinking estate would actually increase the need for estate planning.  Who would have thought!