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Trust/Wills, PODs– My Personal Experience

  • By: Douglas G. Goldberg
  • Published: October 10, 2018
Trust/Wills, PODs– My Personal Experience

This week’s blog comes from Cecilia Gray, our associate attorney. Cecilia worked for GLC for six years prior to 2014 and started back with us a year ago. Her practice focuses on estate planning, elder law and Medicaid planning.

I love my family. They come with their own lovely issues. You would think that because I have had significant experience in both managing money and designing and settling estates that my family would follow my advice with no questions asked…not so. I advised my mother to purchase long term care. She told me that all of her friends said it was a waste of money. (Of course all of her friends were Certified Financial Managers and Estate Planning Attorneys…. NOT.) She had Alzheimer’s for about 10 years. She had always expressed a desire for her estate to be used to take care of my brother (he is mentally incapacitated.) “Cecilia, you and Frank are smart and have done well saving and investing your money, you really do not need anything from me, right? But that doesn’t mean I don’t love you, you know that, right?” Caring for my mom while she was in the later stages of her illness took almost every penny of the money she had saved. If only she had listened to me…at least she did let me draft a Special Needs Trust for the little bit that I was able to save for my brother. This way he wouldn’t have to spend it down the first month he got it in order to keep his benefits.

Then there are my in-laws. I loved both of them very much. I lived with them for about 10 months when I was finishing my last year of law school. We became very close. They have 3 sons. My husband is the oldest. The youngest is a mess, he has been in and out of jail, been sued in the civil courts and is using drugs. My in-laws decided that they did not need a trust even though they have significant assets. They have the common “I love you” Will with everything going to each other and then outright to the children. Seems like a great idea to me to give a son who is a drug addict a big lump sum distribution, doesn’t it to you? I talked about using a trust for the youngest son over and over and over again. My dear mother-in-law would not hear of it. She had to treat all the boys equally and the two older boys did not need a trust. Now my mother-in-law is dead. Everything is in my father-in-law’s name. To avoid probate they have beneficiary designations on everything. This is all well and good, until the family decided to advance a large sum of money to save the youngest’s home from foreclosure. They decided to change Dad’s Will to treat the gift given to the youngest as an advance on his inheritance, thereby insuring that everyone would still get an equal share of the estate when Dad died. There is only one problem with this plan…the Will does not control a single asset. The conversation went like this:

Me: “Steve, that isn’t going to work!” (Steve is the middle son and the POA, Executor, etc.)
Steve: “Yeah it is, Dad’s Lawyer said that was the way to do it.”
Me: “Does the lawyer know that Dad’s assets all pass by beneficiary designations?”
Steve: “Yeah I think I told him that.”
Me: “Then Dad needs a new lawyer.”
Steve: “What?! Why?!”
Me: “Because there is not going to be any assets in the estate for the Will to control. All of Dad’s assets will pass outside of probate.”
Steve: “What do you mean?”
Me: “Ok, so Dad dies. We tell all the financial institutions he is dead. They send each of you a claim form and request that you fill it out and send it in with a death certificate. Once that is done, they send each of you a check. – There will be no ability to adjust anyone’s share due to an advancement.”
Steve: “Oh. Well, we’ll just tell Brian to give back the money he already got.”
Me: “ Oh, sure. That will work.” (Dripping sarcasm that goes right over his head.) “So will you tell him that he will also have to fill out a gift tax return when he gives that money to you and Frank?”
Steve: “What!? Why!? It’s our money, the Will says so.”
Me – tearing my hair out: “Legally that is his money, the Will has nothing to do with it.”
Steve: “Well, I know what we will do! We’ll just take an equal amount of money that we have given the youngest out of Dad’s accounts and put it in my name and Frank’s name.”
Me: “You understand that Dad is mentally incapacitated.”
Steve: “Yes”
Me: “and you are his fiduciary,”
Steve: “Yes”
Me: “and you think this is in Dad’s best interest, and that the youngest won’t sue you later for self-dealing?”
Steve: “What?! Why?!”

If only Mom had listened to me, we could have had all the assets in a Trust. There would be no probate, and advancement language would have worked to insure Mom and Dad’s goal of giving equal shares to the boys would have been a reality.

But no….instead I am looking forward to defending Steve and Dad’s estate against claims of undue influence, self-dealing, etc….maybe the youngest won’t talk to a lawyer when Dad dies…..