I recently had a client we will call Jane Doe. Jane came to me concerned about creating her estate plan to protect the important people in her life. Jane has a daughter, Mary, and a son, Michael. Jane’s first husband (Mary & Michael’s father) died 20 years ago. Jane is now living with a male companion, Joseph; they are not married. Jane and Joseph have been living together for about 5 years and are enjoying their retirement together in Southern California. Jane’s daughter Mary lives in New York with her husband and family and is a successful financial planner. Michael, Jane’s son, unfortunately has had some personal problems and is not financially stable. Jane owns her own home in California and has substantial financial assets, including a checking account, a savings account, several CDs, and an investment account. Jane was concerned about setting up her living trust and estate plan keeping these factors in mind.
Jane’s first concern was Joseph. She wanted to ensure that if she died before Joseph, he would be able to continue to live in her home. Joseph did not own his own home; Jane’s home was Joseph’s home. Jane was concerned that if she died before Joseph, her children might try to sell her house and evict him. I explained that we could set up her living trust to provide a “life estate” for Joseph, allowing him to continue to live in her home for his lifetime. Only upon his death would the property pass to her children, who could then sell it. Jane liked this idea.
Jane’s next big concern was Michael. She wanted to include Michael as a beneficiary of her living trust but was concerned that he lacked the financial knowledge needed to manage a large sum of money. We discussed setting up a “trust fund” provision in her living trust for Michael, which would allow her trustee to provide income to Michael over his lifetime without him taking control of the principal of his inheritance. Again, Jane liked this idea.
Jane was also concerned about who would handle administering her living trust and provide the life estate for Joseph and the trust fund for Michael. I asked if she thought her daughter Mary would make a good trustee. She said she trusted her daughter, who was a financial planner in New York with a good head for money and business. It sounded to me like Mary would make a good trustee. However, Jane was afraid that because Mary lived in New York (on the other side of the country), she could not act as her trustee. I told her that I have many clients who name people living in other states and even other countries to act as trustees of their living trusts. This reassured Jane, and she agreed that Mary made the most sense to be trustee.
We also discussed naming an alternate trustee in case Mary is unable to act when Jane dies. Jane told me she has a nephew in Washington whom she would trust to act as an alternate trustee. I told her that her nephew was an excellent choice as an alternate trustee.
Jane and I worked together for several weeks to develop her estate plan, which included her living trust, pourover will, durable power of attorney, and advance health care directive. After we were done, Jane had peace of mind knowing that Joseph would always have a home, Michael would receive a protected income, and Mary would be able to act as her trustee and manage the estate, taking care of Joseph and Michael. It gave me great satisfaction to know that I was able to help Jane prepare her estate plan and give her this peace of mind.
If you have a similar situation to Jane, or other situations that require estate planning guidance from an experienced estate planning attorney, please contact our office at (760) 673-7600 or email us at [email protected].