Over the last several months, I have represented clients in estate-planning disputes that carry a lesson for many of us. I would like to think that the types of factual situations involved in these matters are rare, but they are not and are occurring at an increasing rate of frequency.
In one case, a relatively wealthy professional decided to plan his own estate, and, using a form which he may have gotten over the Internet or from an unskilled estate planner with whom he may have had previous dealings, drafted his own Will, signed it and had it witnessed. Unfortunately, the format that he used called for only one signature by the witnesses. According to rulings of Indiana’s higher courts in effect at the time, the witnesses were required to sign twice. The Will contained a bequest to our client, a non-relative. The apparent defect in the Will invited some of the decedent’s relatives to question its validity. A ruling from the court that the Will was invalid would have invalidated the bequest to our client. Based upon the law at the time, the decedent’s relatives were certainly within their rights and well advised to challenge the Will. As only luck would have it, at the time of the decedent’s death, legislation was pending in the Indiana General Assembly that would require only one signature by the decedent. During the administration of the estate, the General Assembly did in fact pass that legislation and made it retroactive to a date prior to the date of the decedent’s death. What that meant was that the formerly valid challenge to the validity of the Will was no longer valid. Accordingly, the Will was valid and enforceable, along with the bequest to our client. Had the decedent had his Will prepared by a competent estate planning attorney, the apparent defect in his Will would probably not have occurred, the challenge to the Will could have been avoided, and the enforceability of the bequest to our client and his other intended beneficiaries would not have depended upon the fortuitous passage of retroactive legislation by the Indiana General Assembly. Lesson learned: Have your estate planning done by a competent estate planning professional. Never try to do it yourself.
In another matter, a husband and wife had been sold a very attractive Joint Living Trust package by a company in northern Indiana. On the surface, it was a thing of beauty, in a nice binder, containing Wills, Powers of Attorney, Letters of Instruction, Deed forms, Assignment forms, Pour-Over Wills, you name it. The husband died a little over a year before the wife died. Unfortunately, when the husband died, no one took any steps to implement, or “fund,” the Trust insofar as it pertained to assets that were to be set aside for his heirs. (Although they had been married for more than thirty years, he had no children, but she did, so his heirs were different than hers.) The couple had also failed to properly retitle certain assets in the name of the Trust. In addition, after the husband’s death, the wife continued to deal with all their assets as if they were not in the Trust, made gifts to various relatives, established joint accounts with others and failed to segregate all the assets of “her Trust” from the assets that should have been in “his Trust.” After the wife died, the attorney for the Trustees tried to implement and otherwise apply the terms of the Trust in administering the couple’s assets. However, what the attorney found was that, from its beginning, the Trust did not work. It was replete with vague, ambiguous and even contradictory clauses that made it impossible to interpret and effectively apply. Consequently, the attorney had to “docket” the Trust with the court and seek instructions from the court as to how it was to be implemented. Four sets of lawyers were involved on behalf of numerous heirs. Ultimately, it became apparent to all involved that it would be impossible and impractical to continue litigating the matter and that, instead, a professional probate mediator should be called in to assist the parties in attempting to resolve the numerous issues involved in the dispute. Only after twelve hours of mediation were the issues finally resolved. Afterward, two of the heirs decided that they did not want to go ahead with the mediation agreement that was reached and challenged the mediated Settlement Agreement. Following yet another hearing, the Judge approved the Settlement Agreement over the two heirs’ objections. Lesson learned: Don’t be fooled into thinking that an attractive Living Trust package is going to do for you everything that the person who sold it to you says it is going to do. Prior to being sold such a package, you should give serious consideration to, instead, having a Will that authorizes the Executor of your estate to handle it under an unsupervised administration. Under an unsupervised administration, once your Will is probated, your Executor automatically has nearly all the powers that he or she would customarily need in order to effectively assemble, manage and distribute your assets to your intended heirs, all without prior approval of the court. In short, all the powers that a Trustee reportedly has in a Trust that is primarily intended to “avoid probate.” In the end, you and your heirs will find that this often results in a more cost efficient, streamlined and effective disposition of your assets to your intended heirs than could be accomplished through having your estate administered through a Living Trust. On the other hand, Living Trusts can sometimes be an effective estate planning tool, but only if properly drafted, properly funded, properly coordinated with your other estate-planning documents and properly implemented at the time of the decedent’s death. Only a competent estate planning professional can properly and effectively assist you in doing those things, and in most instances, that is not the person in northern Indiana or Arizona or Delaware who sold you the Living Trust in the first place. While those persons may have sold you the Trust to start with, in most instances, when it comes time to get help implementing the Trust, that task will fall to an attorney living in your community. That task often involves solving the problems that you were originally told the Living Trust would avoid.
In another matter, a gentleman - again, a fairly wealthy professional person - made a Will in which he left the bulk of his estate to his children, who he named. But he defined the term “children” to include all of his natural children. Unfortunately, he had neglected to mention to his attorney that he had another, unnamed, natural child by a previous relationship from long ago. This now-grown child from that previous relationship asked that she be included as a beneficiary of the estate as a natural child of the decedent, and that is what is going to happen, by agreement of all parties concerned. Lesson learned: As with your doctor or your confessor, tell your estate planning attorney everything that he or she should know. The validity and effectiveness of the documents that he or she prepares for you very much depends upon the accuracy and completeness of the information that you provide.
Finally, a very recent matter involved the attempted sale of a Living Trust package to an elderly lady for whom I had previously performed estate planning services, at her request and with the involvement of her adult children. Later, having been invited to one of the numerous “free seminars” sponsored by mass marketers of Living Trusts (held at a local recreational facility where she was supplied a free lunch), she signed an agreement to purchase a Living Trust package from the company that sponsored the seminar. Only when she asked her children to assist her in supplying the information requested by the company did they become aware that she was doing this. When we obtained a copy of the agreement that she had signed, it was apparent to anyone, including the company who was attempting to sell her the Trust package, that she was so feeble that she could barely complete her own signature on the agreement. We requested a reimbursement of the fee that this lady had paid, all up front, and, to the credit of the company, they returned her money. Lesson learned: There is no “free lunch.” Also, if you have an elderly parent whose capacities are becoming diminished, make a tactful effort to assist him or her with their financial and property matters and caution them against making major estate planning decisions without at least first letting you know about it.
Several competent estate planning attorneys and other professionals practice in your own community. Take advantage of the opportunity to learn from experiences like these that they have dealt with and seek their advice concerning your estate planning needs. That way, you can avoid your situation’s becoming a “lesson learned” from which only others may sometime benefit .