Avoiding Legal Problems is The Name of The Game

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 amount of strokes. As is the case with golf, in the arena of estate planning, we are trying to 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 ten years of performing these kinds of planning services for local clientele, I have learned that the people who follow advice are the ones who are successful. Those that try and configure their own solution based on something they read on the internet or what a friend of theirs told them are the ones that are likely to experience unintended consequences.

For instance, let’s say Mom survives Dad and basically inherits everything from Dad free of trust. Okay, so that transfer may not have been too involved because the assets may have all been owned jointly with survivorship rights, or designated to go to the survivor. So, Mom may think that she should just put one child (let’s call him Fred) 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 Fred is sued while Mom is alive, can Mom’s house and assets that she      owns with Fred be in jeopardy? Yes. If Mom passes, and then Fred gets      divorced, can his wife get half? Yes. If Mom passes and Fred’s siblings      plead with Fred 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 Fred are co-trustees and that Fred can act alone while Mom is alive. Mom wants Fred to handle the bills so she makes him a co-trustee with the full authority to act. Mom’s trust directs Fred to distribute the property to he 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 Fred is sued while Mom is alive, can Mom’s house and assets that she      owns with Fred be in jeopardy? No. If Mom passes, and then Fred gets      divorced, can his wife get half? No. If Mom passes and Fred’s siblings      plead with Fred 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.

Contributed by: Mark F. Winn, Master of Laws (LL.M.) in Estate Planning, a local asset protection, estate planning and elder law attorney.