By Alan Orlowsky
Let's Talk about.......An Estate Planning Scenario and how consequences can follow if you fail to plan. If you would like to know more about our Estate Planning Services and how we can help your situation please visit our website for more information.
Scenario:
 |
| Modest Estate - Orlowsky & Wilson |
Edward died leaving a modest estate of $600,000 to his two
adult children; Amy, who lived in Kansas City
and Bobby, who lived in Chicago. Amy was married, fully employed as an
attorney and had two young children.
Bobby was single, living alone and fully employed as a research
scientist working for a large multinational drug company. Both children were graduates of Ivy League
schools and not short on brains.
Edward had done a little estate planning and entered into a
will and trust several years before he passed.
The trust was fully funded, so no probate was necessary. Bobby as was named executor under the will
and trustee under the trust. Upon death
the trustee was directed to distribute one-half of the estate outright to each
child. On the surface things could not
have been less complicated.
Unfortunately, however, Amy and Bobby were estranged and saw eye to eye
on virtually nothing!
 |
| Edward's personal property |
As soon as Edward was buried the problems began. Bobby was entrusted with dividing up Edward’s
personal property, such as clothing, collectibles and jewelry. What Bobby didn’t ship to his sister, he kept
for himself, threw or gave away. There
were no items of exceptional value. Amy received the shipment, but was certain that she had not
received her fair share of such property and immediately filed a law suit
against Bobby as trustee, demanding a complete accounting of not only the personal
property, but also the liquid assets.
 |
| Bobby hired his own Attorney |
Bobby was enraged and hired his
own attorney and responded by delivering a written inventory. Amy then responded alleging that the written inventory
was incomplete and that Bobby had taken certain items for himself that he had
failed to report. Bobby responded by
denying the allegations. By now the
first volleys had been fired and the grudge war began in earnest. Motions were then filed for physical and
deposition discovery. Bobby then delayed
and stalled just to enrage his sister.
The strategy worked in concept, but backfired because Amy was now even
more determined to punish her brother.
Bobby then fired his attorney and hired me to put an end to the
feud. But by then it was too late
because both parties were now determined to punish the other even if it meant
spending $600,000 on attorney fees. As
the feuding continued it was clear that a settlement could never be
reached.....and it never was. When the
dust finally settled several years after Edward’s death all trust funds had
been depleted and there was literally nothing left to battle over!
So, what can be done to prevent feuding children from acting
out there petty differences vis-à-vis a parent’s estate? First of all, if you know that your children
do not get along; appoint an outside third party executor and trustee. Clearly in our scenario, Amy was jealous of
Bobby’s appointment as officer of the estate which added fuel to the fire. Secondly, let your children know specifically
what each will receive on death so that there is no suspicion of fraud by the
executor or trustee. Thirdly, where the
situation is right, include In terrorem language in your documents which states
that if a beneficiary challenges your will and trust he or she is precluded from receiving his or her bequest. Fourthly, know your children well, so if they
harbor ill will toward one another your estate plan can be crafted in such a
way that petty bickering and outright feuding are avoided. Lastly, be aware that although your children
might be bright it doesn’t mean they have the common sense to avoid a sibling
feud.If you have questions about this post or about a particular legal situation, please contact Alan Orlowsky by calling 847-325-5559 or contact us here.
No comments:
Post a Comment