Friday, April 23, 2010

Trust Administration and Estate Planning

Today's blog is on an important topic, which often is ignored by most estate planning attorneys. Often times, we are quick to recommend that family members be given the trustee position upon your incapacity or death. A trustee is a person that is a fiduciary and is required to follow your written instructions. Yesterday, I had a mediation for my client, a trustee of her father's trust. Her brother had filed lawsuit against her individually and as trustee of her father's trust. The brother was alleging that his sister breached her fiduciary duty owed to him under her father's trust. Unfortunately, this brother and sister do not have a relationship any longer after the family feud over money. My law firm did not draft the father's estate plan nor give the trustee advice upon your dad's death. In fact, her dad had a simple trust to be administered. My client through grieven, health issues, and lack of education was ill-equipped to be a trustee. In liklihood, she spent her money taking care of her parents instead of properly using her father's trust to pay for his nursing expenses and his care expenses. Her father had dementia. Prior to his death, my client commingled her personal money with the Trust's money. This is a big "no-no" because a trustee is not supposed to commingle their personal funds with the Trust's funds. Unfortunately, for my client, her legal options were not good. She would lose at trial and face thousands of dollars of litigation costs and attorney's fees to prepare this case for trial. Thus, this case settled for $50,000. We did get her brother to agree to not enforce the judgment (finding of guilt) for $50,000 until my client gets age 62. This is the age when my client can get a reverse mortgage and pay off her brother.

The moral of this story is make sure your estate planning attorney has a simple but clear will and living trust document. Second, it should not read like a lawyer's manual because most likely an average american will be implementing it and not understand the document. Third, make sure your loved ones are actually up to the tasks and make their jobs easy. Fourth, if you have feuding siblings, do not put your children in a situation where they are going to feud. A good estate planning attorney should review all these matters and recommend a good solution.

Sean Robertson, Attorney at Law
Robertson Law Group, LLC
(312) 498-6080 or (630) 364-2318

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