The tools available to an estate planning attorney are: wills, trusts, powers of attorney, advance directives, contracts, and deeds. Things we address are: present and future beneficial interests, covering contingencies, managing tax uncertainty.
All of these tools mentioned are designed to make it so legal problems, costs, family conflicts, and headaches are minimized, if not avoided altogether.
In the game of golf, the winner has the lowest score. In other words, they got through the course in the most efficient manner with the least number of strokes. As is the case with golf, in the arena of estate planning, we are trying to be efficient and avoid problems.
In other words, the winner is the one who does not encounter legal problems.
Fortunately, it is not too difficult to be successful in this arena. Over the past 17 years of providing this service for local clientele, I know the people who follow advice are the most successful. Those who try to configure their own solution, based on something they read on the internet or what a friend told them, are the ones that are likely to experience unintended negative consequences.
Let's consider a scenario. Let's say Mom survives Dad and basically inherits everything from Dad free of trust. That transfer might not have been too involved because the assets might have all been owned jointly with survivorship rights, or designated to go to the survivor.
So, Mom might think that she should just put the name of one child (let's call him Henry) on the house and the accounts and that child will "do the right thing" and make sure his siblings get their share. Well, this is an accident waiting to happen.
If Henry is sued while Mom is alive, can Mom's house and assets that she owns with Henry be in jeopardy? Yes. If Mom passes, and then Henry gets divorced, can his wife get half? Yes.
If Mom passes and Henry's siblings plead with Henry for their share, are they legally entitled to it? No.
There is a better way.
Mom hires a lawyer and creates a trust, and she makes it so she and Henry are co-trustees, and that Henry can act alone while Mom is alive. Mom wants Henry to handle the bills, so she makes him a co-trustee with the full authority to act.
Mom's trust directs Henry to distribute the property to him and his siblings in equal shares and she leaves it to them "in trust" so they can use the money but can't lose it if they get sued.
Now, under this better way, if Henry is sued while Mom is alive, can Mom's house and assets that she owns with Henry be in jeopardy? No.
If Mom passes, and then Henry gets divorced, can his wife get half? No.
If Mom passes and Henry's siblings plead with Henry for their share, are they legally entitled to it? Yes.
What is the moral of the story? A little bit of planning can make a big difference.
Mark F. Winn, J.D., Master of Laws (LL.M.) in estate planning, is a local asset protection, estate and elder law planning attorney. mwinnesq.com