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Trust Reviews & Communicating Changes to Family Members

By August 22, 2013Estate Planning

I recently sat down with my clients, Bill and Mary, for their three year Revocable Living Trust review. Like other Trust reviews, I initially start off by confirming previous important players designated in the Trust. For instance, the Successor Trustee(s)will handle financial decisions should Bill and Mary become incapacitated and when they die; the healthcare agent(s) will handle medical decisions should they become incapacitated; and the  name(s) of the individual(s)/charity(s) to receive the estate after they both die.

Bill and Mary expressed they wanted to remove their son as Successor Trustee/Healthcare Power of Attorney and replace him with their daughter. They explained that their son had started drinking alcohol much more frequently, and they were concerned that he may be an alcoholic and unable to reliably handle their affairs if needed.  Bill and Mary were very upset as they shared with me this personal story about their son. Unfortunately, he is unwilling to admit his problem and get help, and it has been difficult for them to watch his life start to fall apart. It was evident they had been thinking about making this change to their Trust for some time, but delayed and even cancelled previous meetings with me because they thought their son would get his act together.

I assured Bill and Mary that we could make the necessary changes to their Trust to have their daughter be in charge of all financial and healthcare decisions. Bill and Mary were losing sleep over the thought of their son being in charge of distributing their estate when they passed; and more importantly, they feared their hard-earned estate would be wasted at the nearest liquor store. Fortunately, with the right provisions, a Trust is a flexible tool to allow for a third party trustee to be in charge of the son’s share after Bill and Mary pass away. Their son’s inheritance will not be wasted and he can still receive discretionary distributions from a third party trustee for his health, education, maintenance and support.

I suggested to Bill and Mary that they should write a letter to their son explaining what they had just expressed to me. This letter may be the toughest letter they write, but it wouldn’t have to be delivered to their son while they were alive. The letter could be read after both Bill and Mary have passed away. Why did I suggest this? Often times a division between family members occurs when it comes to light who was nominated (or when one is removed) to wrap up the estate, and when a beneficiary is not his/her own trustee of the inherited share. It is wiser to alleviate the possibility of hurt feelings between the surviving family members by giving a heartfelt explanation.

A properly drafted and executed Revocable Living Trust is a powerful tool to protect spend-thrift beneficiaries; avoid Probate; minimize/avoid Federal Estate Taxes; avoid a Guardianship and Conservatorship; and provide asset protection against creditors, divorce and Medicaid spend-down. Has your Trust been reviewed in the last three years? Does it contain these protections? Please call to schedule an appointment with one of our estate planning attorneys for a free consultation to confirm your key players and protections.

For more information, or to schedule your free consultation, contact our office today at 888.222.1328.

What the Attorneys of Morris Hall Can Do For You:
The attorneys at Morris Hall have 100’s of years of combined experience ensuring that families’ assets are protected from probate, unnecessary taxes, creditors, ex-spouses and Medicaid spend-down.  The attorneys also help those in Arizona and New Mexico to apply for and receive Medicaid assistance and Veterans Benefits.  Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Cave Creek, Tucson, Prescott, Flagstaff and Arrowhead.  Our New Mexico offices are located in Albuquerque, Las Cruces and Santa Fe.  Contact us today at 888.222.1328 to schedule an appointment!

This blog should be used for informational purposes only.  It does not create an attorney-client relationship with any reader and should not be construed as legal advice.  If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.

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