Jim and Sally did everything right… or so they thought.
They grew up in strong, middle class families, did well in school, and had many friends. Jim had a successful career with a local company, while Sally raised four responsible, well-adjusted children. They lived a frugal life, and saved as best they could, eventually building a sizable nest egg.
When Jim retired in 1992, they even met with an estate planning attorney and setup trusts to leave an inheritance to their children.
Armed with financial security and peace of mind, they enjoyed their golden years, and passed away surrounded by loved ones in 2014. Jim died in February, and Sally in November.
Unfortunately, that peace of mind emanating from the dusty, 22 year old, estate planning binder in Jim’s desk did not extend to their children.
When their estate plan was established, the estate tax laws were vastly different from their current form. To make matters worse, Jim’s trust contained complex provisions for the time period between Jim and Sally’s deaths, but the family never bothered to look at the trust until after Sally’s death. Understandably, they didn’t want to worry her with technicalities, but the lack of proper administration may undermine delicate tax strategies.
Jim and Sally’s estate plan nominated their eldest daughter, Samantha, as their executor and trustee. But Samantha now lives in Portland, Oregon, and is not interested in handling her parents’ affairs.
The plan also nominated their son, Joseph, as an alternate to Samantha. Unfortunately, although everyone got along during Thanksgiving and Christmas, Joseph’s relationship with his brother Ian has been strained for a while now. As a result, Ian’s wife is planning to talk to her old college-roommate, who is now a lawyer, to see if they should object to Joseph’s appointment as executor and trustee.
Making matters worse, Jim and Sally’s estate plan dictates that children equally share their vacation home in Maine. However, they all have families and careers of their own, and could not easily schedule their vacation time around each other. Conflicts also arose over who should contribute to the carrying costs of the home, and whether or not it should be sold.
What’s really frustrating about this narrative is that the dusty binder from 1992 actually contained a great estate plan… had Jim and Sally passed away during the Clinton administration. It was drafted by a competent lawyer, who since retired, and made sense at the time. But what is truly ironic is that that very same binder provided Jim and Sally with their peace of mind… a peace of mind that was vastly misplaced.
Had Jim and Sally met periodically with an estate planning attorney, rather than trusting a 22 year old plan, they could have provided a better inheritance for their children, and prevented a great deal of conflict and frustration.
Do you know anyone with a dusty binder?