Is estate planning a farce? Does it really provide as many benefits as promised?
Estate planning is one of the largest practice areas in the legal field. Planning for one’s ultimate passing and taking steps to ensure that loved ones are taken care of and assets are distributed to the right people is a valuable and important endeavor. And I know quite a few estate planning attorneys; all of them are not only terrific in the actual documentation of their clients’ wishes, but they are all tremendously sympathetic and understanding of the difficulties facing their clients. Addressing one’s own mortality can be quite challenging.
It is common in preparing an estate plan for a lawyer to prepare a trust, a will, a durable power of attorney and an advance health care directive. The great benefit of a trust is not only its use in avoiding the probate process, but it also provides for a seamless transition of authority; if the trustee of the trust is unable to act, no court action should be necessary to bring the successor trustee into the fold. Additionally, a durable power of attorney permits the appointment of an agent-in-fact to act should the creator be incapacitated or unable to act in his/her own interests. If an agent-in-fact is in place, a conservatorship is unnecessary and the court processes can be avoided. And, moreover, this process allows the creators to control who makes decisions for them and it is not incumbent upon the court to make such decisions.
Well, friends, I am here to tell you that I am concerned that all of the money and time spent in preparing these estate plans is all for naught.
Take this example: A woman creates a trust and nominates her youngest son to be her trustee if she is unable to care for her own needs. She also executes a power of attorney that nominates her youngest son to act as her agent if she is unable to do so. Older son, however, is not kept in the loop about his mom’s financial situation and he believes that his mother is incapacitated, so he files a petition to have himself appointed as her conservator. Even though mom has already indicated her wishes as to who should take care of her finances and has appointed her younger son as her agent under the durable power of attorney and as her successor trustee, the court seemingly is unwilling to dismiss the conservatorship petition outright. In fact, now that the court process has been commenced, older son may be entitled to investigate not only mom’s mental state, but also her financial situation. Mom had her own reasons for choosing one son over the other to care for her interests, but now that the older son has filed his petition, it seems like it’s now becoming a “free for all” with mom’s specific wishes and instructions being ignored. That was $10,000 in estate planning fees wasted. But why does the court so easily dismiss mom’s specific wishes? It makes no sense to me, but that’s what is going on right now.
Or take this example: Mom creates a trust and provides that if she is deemed to be incapacitated by two doctors then her son shall become the new trustee. Mom voluntarily moves from her house to a retirement home and decides to sell her home. Son doesn’t want the home sold because he will inherit the home when mom dies, so son gets two doctors to write letters that mom is incapacitated and son uses that as a basis to take over the trust. Son then contacts all of the parties to the sale of the property and threatens to sue them if they continue with the sale. Mom doesn’t know any of this is going on but when she does find out, she goes to two other doctors, both of whom write letters that say that she is not incapacitated. Well, what gives then? If the son’s purposes for taking over the trust and interfering with the sale of the property are selfish, what can mom do? She has been deemed to be incapacitated so she theoretically cannot enter into a contract with an attorney to represent her to pursue her son, so what can be done? A conservatorship action?
Want to hear more? Just ask, I have plenty of them. None of them seem to make any sense, but what they seem to have in common is the court’s unwillingness to follow the creator’s specific wishes.
The vast majority of estate planning is straightforward and, like any type of relationship, hiccup-free. No difficult issues to address, no problems with administration, everything goes smoothly. But I am afraid that we will be seeing more and more of the issues coming to light because of greedy family members, warring siblings and struggles for control. And unless the court takes a hard-line stance on these things, it looks like more court involvement will be necessary. How this will be affected by the court closures and budget-cuts is clear—inefficiency in the court, lengthier processes and significantly less being accomplished. Why the courts let this stuff happen is really anybody’s guess. But if things continue the way they seem to be going, the courts are going to more and more make estate planning attorneys look like liars. And that is truly bad for business and, more importantly, detrimental to the interests of the clients.
Have a great week.