Legal: Fighting Over Assets?

“My parents made a trust with a lawyer. Why is it not working and the trustee and beneficiaries are fighting over the assets?”

Sadly, these are words I often hear from families who call me after the second parent dies to settle their parents’ estate. The Trust might have worked from the drafting attorney’s point of view in that the assets did not go through probate and the taxes were minimal. However, the drafting lawyer probably did not investigate and counsel their clients as to the relational aspects of estate planning.

In my 25 years’ experience as a lawyer, I’ve come to realize that there are five questions that must be answered with a “Yes” to ensure that the estate plan will work:

  • Did the plan properly transfer the assets to the beneficiaries avoiding probate and minimizing tax?
  • Did the beneficiaries receive the assets properly to minimize the risk of mismanagement and misspending of assets?
  • Did the parents clearly convey their message, meaning, and intent to their trustee and beneficiaries?
  • Did the beneficiaries and trustee clearly receive the message, meaning, and intent from the parents?
  • Will the trustee and beneficiaries honor the message, meaning, and intent of the parents?

In other words, making the estate plan is not enough. Communication, verbally and in writing, with the trustee and beneficiaries over time conveying the message, meaning and intent, and making sure they clearly receive your message, meaning and intent is critical to a successful estate plan.