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Underlying the creating
of any estate plan are profound human concerns: a primal urge for order and the
desire to pass on property to loved ones. A good estate plan is an accurate reflection
of your deepest personal wishes. Although much of the examples below are about
mechanics and methods, it's important to remember that no matter how well you
deal with legal devices, your estate plan won't succeed unless you also take human
concerns into account. Now, let's look at a couple of different family situations.
Case Study
A: "Her Kids, His Kids"
<Situation> Husband and wife get
married when they are in their 50s. Wife has a son from her prior marriage. Husband
has 3 children, 2 daughters and a son. Husband and wife both work. Husband has
a slightly higher income, and savings of $400,000 to wife's $130,000. They buy
a house, with each spouse contributing half the down payment, and equally sharing
the monthly payments. Both spouses want to ensure that, when the other dies, the
survivor gets to live in the house for the rest of their life. When both spouses
die, they want the house to be divided equally, with one share going to wife's
son and the other share divided between husband's 3 children. Similarly, by use
of a marital property control trust, each spouse's assets will be left for the
"use" of the surviving spouse, with "use" defined to mean
the right to receive income the property generates or literal use of some property
(for example, a car). Neither spouse can invade the other's principal.
<Solution>
Husband and wife consider the wisdom of discussing their plan with all their children.
Since they have chosen one of husband's daughters, to wind up their affairs after
their death in the role of the successor trustee of their living trust, they have
already discussed it with her. But because the wife's son has never accepted the
husband, and remains hostile to him, husband and wife sadly decide that talking
their plan over with wife's son will only provide an occasion for more rancor.
So they simply don't tell him what they've agreed upon. Case
Study B: "Trouble Coming"
<Situation> Widow is 85 years
old and in poor health. She lives in a retirement community. She has one son,
age 57. To her sorrow, she has not been close to her son for decades, and has
become nearly estranged from him since his 3rd marriage. The widow believes her
son's third wife dominates him, is always rather weak-willed, and that she has
encouraged his worst materialistic tendencies. Widow has a substantial estate.
During her 15 years of retirement, she has been very involved with her church,
and also with a program to help poor children. She intends to leave the bulk of
her estate to these charities, but worries what son and his third wife might do.
<Solution> In one of her calls to son (he almost never calls her), she mentions
that she might leave some money to her church. Soon after, she receives calls
from son, and even third wife, suddenly concerned about her health, including,
not so subtly, her mental health. Widow suspects that son and third wife might
contest her will, possibly alleging that the church had gained "undue influence"
over her. After talking her worries over with her closest friends, she reluctantly
concludes that, given son and third wife's greed, it's unwise to try to further
discuss her plans with them. Better to accept that they may fight her will. She
decides to hire a lawyer experienced in will contests, so that she can do everything
possible to ensure that her will stands up if attacked in court.
(I would
like to share with you more case studies in future issues.) Many
people put off estate planning because thinking of death is not very pleasant.
We also have barriers to candor, such as fear that motives can be misunderstood,
or the sense that honor lies in not caring about a parent's property or that of
any other loved one. From the younger generation's viewpoint, it can be very difficult
to open up estate planning discussions with parents. At the same time, you many
want the reassurance that sensible planning has been done. For instance, you'll
probably want to be sure that your parents have arranged for someone to handle
their medical and financial affairs if they become incapacitated. There are many
decisions to be made concerning this matter alone. We can suggest no magic formula
that makes broaching the subject easy. All you can do is be tactful and genuinely
concerned and see if that opens any doors. For
assistance with Estate Planning, Asset Protection, and saving taxes when selling
your appreciated assets, contact me at (310) 800-6333 or e-mail: mail@tracytaguchi.com. 
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