Today’s blog was written by guest contributor Gosha G.S. Sekhon, LL.B., TEP (Sekhon Legal Services)
It is probably no small irony that when an estate planning specialist such as myself randomly selected a novel to read over the holiday season it turned out that the central conflict was an estate plan gone wrong.
The Dutch House, by Ann Patchett, is an excellent read. However, for those in the estate planning profession, it is also a reflection on what goes wrong when insufficient or no estate planning occurs.
The red flags run rampant in the build-up of the story, including a predatory marriage, blended family, and a business without a succession plan. The patriarch in the novel seemingly makes every mistake estate planners warn about: he puts all of his assets into joint ownership with his second wife, fails to execute a will, and instead relies on promises from his family members that they will respect his wishes after his death. It is hardly surprising then that things go horribly wrong for the children of his first marriage when their father dies intestate. It’s practically a law school exam waiting to be written!
While The Dutch House would not have been such a gripping read had the family patriarch obtained and followed proper advice, the rest of us hope that our lives (and deaths) will not play out like a novel. Here, then, is the advice that could have saved the characters a lot of heartache:
- When marrying someone who has children from a prior relationship and/or substantially less assets, a marriage contract or prenuptial agreement is highly recommended.
- If you have children from a prior relationship, you would be wise to ensure they are provided for on your death beyond a simple verbal promise from your new spouse.
- Get a will – plain and simple. A will gives you more options and the flexibility to create a distribution scheme that can provide for your spouse and children appropriately.
- When creating a trust (whether testamentary or inter vivos), ensure you are as explicit as possible in your definitions of the purpose of the trust, the parameters to qualify as a beneficiary, the expected duration, and the eventual gift-over of the balance of the trust.
- If you’ve worked hard to build a business, don’t let it fall apart after your death. Take the time to make a succession plan that includes a process for any future sale of the business and the distribution of business assets.
In the end, what I found most striking was the emotional, psychological and even physical toll on the two central characters as a result of their father’s poor estate planning choices. The financial blow was almost secondary, and the characters were able to eventually overcome their loss. While this may not come as a surprise to my estate litigation colleagues, it is a good reminder to lay persons and planners alike that a carefully considered estate plan can substantially reduce stress on loved ones and avoid the fracturing of family relationships. The peace of mind that a solid estate plan affords should not be undervalued.