Several years ago, when my mother was first diagnosed with acute myelodysplastic leukemia, the first thing that I did was search Google to learn more about the disease. The more I searched, the more confusing everything became. There was a lot of information from various sources, which all appeared credible.
The problem with Internet searches is that without specific knowledge about the issue you’re searching, you might take something out of context. You also don’t know if the source of the information you’re finding has any bias or how credible that source might be.
When we find information on the Internet related to medical issues, we usually bring that information to our treating physician and ask her about what we’ve found. That’s largely due to the complex science associated with our condition, whatever that may be. We realize that we need guidance when dealing within a specialized field.
For some reason, however, I’ve found in my more than thirty years of practice that some laymen don’t have the same regard for the law. In other words, they’ll run a few searches on the Internet, take what they’ve found as the gospel, providing many with confidence that they can self-diagnose and solve a legal issue, like estate planning.
I call these people Google U graduates. FYI that degree isn’t worth much!
Because each one of us is so different, the application of legal strategies will likely have different outcomes. Consider, for example, the husband and wife in a second marriage, with each having children from a prior marriage. Husband searches Google and finds that he can create a “marital trust” for wife that will provide her income for life, but then at her death revert back to his children.
Perfect! That’s what he wants! So he logs on to LegalZoom and creates a trust.
No need for expensive lawyers, right?
But there’s some crucial questions Husband should have investigated. What kind of assets will be held by the trust? Is he designating an IRA or 401(k) there? In all likelihood, that plan won’t accomplish his goals because of Inherited IRA distribution requirements. In that scenario a few problems may arise, such as the acceleration of income tax, Wife not getting sufficient income, or all of the asset consumed before Wife’s death leaving nothing for Husband’s children.
Who is going to be trustee over the marital trust? Is it Wife? Will she invest the funds to favor income over growth for his children? If she does, could she face a lawsuit from the children for breach of fiduciary duty?
What if there is a bunch of vacant land in the marital trust? The Internal Revenue Code mandates for a trust to qualify for the marital deduction, the beneficiary must demand that the trust invest in “productive” assets. By definition, vacant land doesn’t usually meet that criteria. Can Wife as beneficiary force whomever the trustee is to sell the vacant land? What if that land is in the path of development and may increase significantly in value over the next several years, but it hasn’t yet?
How about the homestead? Can we grant Wife a life estate without violating Florida’s constitutional and statutory homestead descent and devise rules? What happens if Husband’s Last Will and Testament contains an invalid devise of the homestead? In such case, Husband’s children have an immediate legal interest in the residence. What can happen now? What if one of the children are undergoing a divorce? Could this become a problem for Wife?
All of these questions revolve around one single scenario, a Husband trying to provide for his Wife and then leave everything to his children upon her death. There might be hundreds of different scenarios in your estate plan. Without the proper education, training and experience, you’re unlikely to recognize all of the legal and tax issues that apply to your situation, and therefore you can’t possibly select the type of plan and the provisions it requires to accomplish your goals.
I like to tell my clients that estate planning is just as much of an art as it is a science. The best planners are creative, in that they first listen to their clients’ goals and concerns, then, considering the types and worth of the assets owned, fashions a plan to meet those goals.
No one knows what the future brings, either. Tax laws change. Family dynamics plays into the equation. Consider a situation where a client’s son and daughter don’t get along. What can go wrong in the client’s estate plan when he suffers from dementia or Alzheimer’s? How might the distrust amongst the siblings become a big problem?
In the end, take Google U for what it’s worth, a starting point. For best results, take what you’ve learned from it and ask guidance from a seasoned professional.
© 2020 Craig R. Hersch. Originally published in the Sanibel Island Sun.