This is the first article in a new series by Probate Litigation attorney Robert Sewell which will focus on “war stories” regarding common estate planning mistakes, as seen by a probate and trust litigator. These stories are meant to serve as lessons for the average reader. If you see the fact pattern below in your estate plan, please contact Mr. Sewall to discuss how to remedy the problem.
THE FATAL FLAW: Frank creates a trust. He titles no assets in the name of trust. He fails to create a pour-over will believing the trust was enough. Frank disinherits three of his six children from the trust because he supported these three disproportionately to the other children during his lifetime. Frank dies believing all his property was in the trust. The result is that the disinherited children inherit equally to the other children as Frank is “intestate,” meaning he has no estate plan. This situation is not unique.
THE REMEDY: Individuals who wish to create a trust should also create a pour-over will. A trust is a device that presently allocates property, as identified by the trust maker (“trustor”), to be placed into the trust. If the trustor does not title his/her property in the name of the trust, the property is not in the trust. Rather, upon the testator’s death, the property is in the “estate.”
A pour-over will directs property left outside the trust on the trustor’s death to be poured into the trust after death. One might argue that another solution is to title everything in the name of the trust before death; however, whether intentionally or unintentionally, most individuals leave property out of the trust. If you have a trust, but do not have a pour-over will, your estate plan is incomplete.
(Please note: I see this estate planning mistake often when individuals purchase trusts from the internet or from a certified document preparer. If this is your situation, please have your estate plan reviewed.)
ABOUT OUR GUEST AUTHOR:
Robert Sewell is a partner at the law firm of Davis Miles McGuire Gardner in Phoenix, Arizona and practices primarily in the areas of Commercial Litigation, Probate Litigation and Real Estate Litigation. He has written on a variety or related issues. Mr. Sewell’s litigation experience involves cases in federal, state and administrative settings. He has also resolved disputes through mediation, arbitration, as well as bench and jury trials. Mr. Sewell has also worked as a professor of business law. You can contact him directly for help or through Ike Devji. http://www.davismiles.com/attorney/robert-n-sewell/