Are You In the Dark About What Will Happen When Your Husband Dies?
May 22, 2008 – 5:36 pmA friend of mine from out of state asked me to review estate planning documents she is getting ready to sign before going out of town for the first time with her husband and without her kids.
These documents were prepared by a traditional estate planning lawyer who sent her the draft documents for review before she signs them.
Right away, I had the feeling this was not going to be pretty. Why?
Well, to begin with the lawyer was her husband’s lawyer from before she was married to her husband and the lawyer didn’t spend very much time with her explaining the planning options or the way things were being set up.
Then, he sent her draft documents to review. Frankly, that’s just nutty. Unless I am working with a lawyer who specifically requests drafts be sent to him or her before signing, I never send drafts. How can this lawyer possibly expect my friend to review over 150 pages of documents and understand whether they do what they are supposed to do? Impossible.
The lawyer should have sat down with my friend and her husband and reviewed the documents with them before they sign them - not sent them to his client to review on her own.
My friend said she was told the documents will make things easy for her at the time of her husband’s death. And, she was ready to sign them because she had no reason to believe anything else. It just so happens she mentioned to me she’d had documents drafted and she was reviewing them and I offered to take a quick look.
Uh-oh. These documents have a lot of problems.
Here’s just a couple of things I saw:
1. When her husband dies, his half of the assets go into a trust that she does not have full control over at all, though she was told she would. In fact, she has to go to a Special Trustee for distributions from the Trust.
2. There is a mandatory division of the assets after her husband dies, which will require her to set up multiple trusts, even if tax law doesn’t warrant it based on the size of their assets at the time of his death making the administration after his death more complicated and expensive.
3. The plan does not adequately provide for her child from a prior marriage. If she were to die, he could potentially be taken out of their home and into the arms of strangers until the authorities could figure out where her family is and what to do.
4. After her death, the trust leaves all of the assets outright to their beneficiaries when they turn 25, 30 and 35 without making sure those assets would stay in protected trusts that the beneficiaries could access, control and use but couldn’t be lost to divorce or lawsuits.
Of course, my friend couldn’t know any of this just by reading the documents. She’s not a lawyer. And, I’m going to give her husband the benefit of the doubt and assume he didn’t realize what these documents said either and didn’t know his options for doing things differently. Maybe he thought he was making things as easy as possible for her. But, he wasn’t.
Estate planning isn’t about signing form documents you don’t understand. It’s about having a relationship with a trusted Personal Family Lawyer you will be able to turn to for guidance when something happens.
My advice to my friend is the same as my advice to you … make sure the lawyer who prepares your estate planning documents is someone you absolutely, totally 100% trust is going to be there to guide you and hold your hand when something happens to someone in your family. Don’t sign documents prepared by someone you barely know who may not be looking out for your best interest. This is about so much more than the documents.
If you don’t take this advice, you could be the one left holding the bag when your spouse dies.
If you’d like a review of your estate planning documents and a consultation with me to discuss what they say and what will happen when your spouse dies, I have a few limited consultation times available nationwide. The review and consultation are $950. Contact support@familywealthmatters.com if you’d like to get on my calendar.