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Jewish World Review Dec. 17, 2003 /22 Kislev, 5764

Jan L. Warner & Jan Collins

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Consumer Reports

Dad's new wife took the inheritance | Q: Our parents planned their estates using a lawyer reputed to be an expert. Mom and Dad put all of their assets — including their home, furniture, jewelry and all other property — into a living trust. The trust stated that our parents could use the house and the funds until the second of them died, at which time my sister and I would inherit everything. Our parents were the joint trustees, and at the death of the first of them, the survivor became the sole trustee.

When Mom died three years ago, we didn't understand why there was no will to read, but we found out in spades just recently. Dad, then 82 and in what seemed like failing health, was brokenhearted until he began seeing a woman in her 70s whose husband had recently died. They married late last year. We didn't know it at the time, but my Dad's new wife took him to another lawyer, and he deeded everything out of the trust into her name. Dad died suddenly six weeks ago leaving an old will and basically no assets. From what we can piece together, his wife received more than $400,000 in real estate and other assets from the trust.

Needless to say, my sister and I are most upset, not so much that we did not get the inheritance we had been promised, but because his new wife received a big windfall, including family heirlooms, photographs, and the like that we will never see. We consulted a lawyer who told us that he thought our father had a duty not to deed the property out of the trust because my sister and I were beneficiaries when he died. But he also said there could be no guarantees, and that it would take quite a bit of money and time to try to get the property back. Do you think we should make this investment? A: The first question to be answered is whether your father had the authority to transfer assets from the trust and, in effect, revoke it. The answer to that question depends on the language of the trust itself. If he did, the second question that must be answered is whether your father had the mental capacity to make transfers from the trust.

Since the trust property was being held for the benefit of your parents during their joint lives, they were the primary beneficiaries. Because you and your sister were not entitled to receive anything until both of your parents were deceased, your benefit was, at best, contingent. At your mother's death, your father became the sole beneficiary of the trust as well as the sole trustee. And unless the trust says more, we do not believe your Dad had any legal responsibility to protect the potential interests of you and your sister. If your father had sold the assets contained in the trust to pay for his care or had gambled them away, the result would be the same.

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While it's reasonable to believe that your parents wanted you and your sister to inherit everything at the time of the second death, and while the trust could have assured that your parents' intentions were carried out, the document apparently did not go far enough to prevent the transfer of property from the trust to a new spouse or, for that matter, anyone other than you and your sister. By including language that made the trust irrevocable at the first death, no assets could have been transferred from the trust without your and your sister's signatures.

Many seniors sign what is put in front of them without understanding the long-range consequences of the documents because they trust lawyers to do what is best for them. Here, assuming your parents' intentions were as you believe, poor draftsmanship cost you and your sister your inheritance.

Taking the Next Step: Revocable living trusts used by seniors can be drafted to become irrevocable upon the occurrence of such events or contingencies as death, mental incapacity or even the passage of time. And, the authority of trustees to distribute assets from a trust can be limited based on such conditions as the circumstances dictate. While we believe that parents should establish their estate plans based on their desires and intentions, we also believe that the practicalities of future contingencies should be considered when planning documents are drafted.

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JAN L. WARNER received his A.B. and J.D. degrees from the University of South Carolina and earned a Master of Legal Letters (L.L.M.) in Taxation from the Emory University School of Law in Atlanta, Georgia. He is a frequent lecturer at legal education and public information programs throughout the United States. His articles have been published in national and state legal publications. Jan Collins began co-authoring Flying SoloŽ in 1989. She has more than 27 years of experience as a journalist, writer, and editor. To comment or ask a question, please click here.


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Is care insurance a healthy choice?
Is there protection against Medicaid costs?
Long-term care insurance comes up short
HIPAA -- too much privacy?; nursing home doc could care less
Private pay nursing home residents pay more
Separated families should use care managers
What Makes Up a Caregiving Team?
Who is the client, parents or children?:

© 2003, Jan Warner