Jenny Rozelle, Host of Legal Tea
Cautionary Tales - Blended Families & Estate Planning - Episode 21
Hey there, Legal Tea Listeners –This is your host, Jenny Rozelle! Today’s episode of Legal Tea is a cautionary tale – a real-life case with real-life clients with real-life facts; though names are altered for confidentiality purposes!
I see no better time to talk about the topic of “blended families” than the week of Thanksgiving, where you all may be getting around the same dinner table. Or, maybe this is the worst idea ever … to talk about “blended families” on a week like this. Oh well, here we are!
If you stop listening for whatever reason and never come back to this episode, this is the big takeaway from this episode – if you are a blended family, GET YOUR ESTATE PLAN DONE. And news flash – estate planning for blended families can be done, but it requires much attention to detail, a deep understanding of estate law, and a willingness to possibly have some difficult conversations. So, if you are still listening, let’s dive in…
Recently, I’ve heard my husband (who in case you’re tuning into the podcast without listening to prior episodes – my husband, Justin, is an estate and elder law attorney, too, and we’re at the same law firm) … anyway, so I’ve heard Justin talk about two cases recently that 1) involve blended families and 2) who better be glad we don’t do hourly billing. So, we’re going to chat about BOTH situations actually…
First, we’re going to talk about the Johnsons – oh, the Johnsons…where to even start with them? Justin initially met with MRS. Johnson only – and she shared that MR. Johnson’s health had declined and she was interested in learning how she could get their assets protected. A fairly-extensive, but solid game plan was put together – and it involved utilizing an Asset Protection Trust and getting Mr. Johnson on Medicaid.
Because of Mr. Johnson’s existing documents, it forced Mrs. Johnson to have to work with Mr. Johnson’s child – keep in mind, this was Mr. Johnson’s child, not hers. They each had their own respective children – but none together. It was discovered through the process that there was a fair amount of distrust between Mrs. Johnson and Mr. Johnson’s child – which made the process more difficult.
You see, prior to utilizing our law firm, Mr. and Mrs. Johnson had each created a Revocable Living Trust – meaning it was not a single, joint Trust. Though, because 1) Revocable Living Trusts offer no asset protection against Medicaid and 2) Medicaid does not care if you and your spouse hold things individually and not jointly, we had to combine their assets as part of the “game plan.”
Mr. Johnson’s child was squeamish about this idea – he didn’t want to join things with his mother-in-law, Mrs. Johnson. But to get Mr. Johnson on Medicaid, we had to. You could feel the distrust between the two – and at times, I’m just Justin felt like a mediator rather than an estate/elder law attorney. Actually, I know he did. So, for that reason, he had Mrs. Johnson and Mr. Johnson’s child execute a Promissory Note that basically said, “Hey, when we are through the Medicaid process and on the other side, Mrs. Johnson has to ‘pay Mr. Johnson’s part back’ to bring it back even.” Both signed – thank goodness.
Sometimes, things go awry – and they do so out of our control. Mr. Johnson ended up passing up shortly after Medicaid was filed for (and subsequently approved). At this point, Mrs. Johnson needs to get Mr. Johnson’s share back to Mr. Johnson’s child. We knew she would – she wasn’t evil, but she definitely started nickel and dime’ing to be able to “keep” some of Mr. Johnson’s money. Like, she said that she purchased a chair for Mr. Johnson, so she should get reimbursed for that… Yeah….
After SO many conversations between Mrs. Johnson and Mr. Johnson’s child, Mrs. Johnson finally (after many reminders) paid Mr. Johnson’s child back. All ended up fine and dandy. I was not part of this case and never dealt with Mrs. Johnson, Mr. Johnson’s child, no one from the families – but I can assure you that I saw the literal “wear and tear” on my husband. It was a lot of work – trust me.
Thankfully, for the family, they had an awesome estate/elder law attorney working alongside them – someone like Justin, like me, like an attorney skilled in the estate/elder law field, we’re uniquely equipped and trained to approach a situation based on facts (not emotions) and develop/execute a plan in the best interest of the client. Emotions are real – and they are quite prevalent with blended families, especially when money is on the table. So for all my blended families out there, when it is time to #DoYourEstatePlan, please ensure you work with a qualified estate and elder law attorney. We’re used to these sort of things…
Okay, let’s shift to the second story now…
This next family involved a Dad, Stepmom, and Son (of the Dad – hence why I say Stepmom). Let’s name Dad and Stepmom, Chuck and Nancy, and the Son, Ron. So Chuck and Nancy had some sound legal advice, because long story short, Chuck had some farmland – that was his family’s farm and had passed down the generations. Chuck had, within his estate plan, created a standby Trust for Nancy that essentially stated – if Chuck passed before Nancy, the farmland goes into a Farm Trust where Nancy is not the owner of the farmland, but while Nancy is living, she’s entitled to the income the farmland generates. Then at Nancy’s passing, the farmland leaves the Farm Trust and is distributed to Ron, Chuck’s son (not Nancy’s son).
Chuck passes away, the farmland goes into the Farm Trust, and Nancy starts getting the income – everything was going beautifully according to plan. Well, Nancy has a friend at church that is an attorney – and he thinks she’s “getting ripped off” because the income should be more than it is. So, Nancy hires said attorney to represent her. Oh Lord have mercy…
So, Ron, Chuck’s son, contacted Justin “for his opinion.” Justin had helped Ron with his estate planning, so Ron trusted Justin’s input. You see, Justin is the nicest guy ever – he’s nice, patient, gentle, etc. So, he told Ron, “I’ll try to get things settled down – let me see if I can talk to Nancy’s attorney, explain what your father was intending to do, explain that the farmer farming the land is on contract for the cash rent amount…” Did Justin have to? Nope. Did Justin even accept a penny to help Ron? Nope. Just was trying to keep things calm.
After a conversation with the attorney, Justin talked with Ron about, “Hey, what if we throw here a chunk of change – like what it would if she survived 20 more years [she was already 80 years old!], you could “pay her off” for the 20 years of cash rent and maybe she’d be agreeable to taking the money and extinguishing the Trust?” Well, Nancy’s church-friend/attorney was NOT playing around – he said, “Nope.” (Side note: Part of me wonders if he’s even discussed these things with Nancy. According to Ron, Nancy was super nice, respectful, agreeable to things … before this church-friend/attorney got into the picture.)
At this point, Justin waved the white flag – clearly, this guy is wanting to push the issue and Justin/me/our firm, we don’t do estate litigation. (Thankfully!) So, Justin laid the bad news on Ron and ultimately referred Ron to an estate litigator to “play hard ball” with Nancy’s attorney. And as I write this episode, this issue/this case has not been resolved to my knowledge –I believe it’s still going on … sadly.
This reminds me so much of something I tell clients all the time … You know, even though I only practice estate and elder law, routinely I will get asked a “legal question” out of left field – anyway, people will say, “Now, can I get sued if…” and I’ll stop them and abruptly say “yes.” Here’s something you all need to hear – ANYONE can sue ANYONE at ANY TIME for ANYTHING. And guess what? Good chance they’ll find an attorney at least willing to take the case (and pad a bill).
So perhaps the lesson to learn from Chuck, Nancy, and Ron – is that even when a solid plan is created, sometimes crazy things still happen. Chuck did the BEST he could – he wanted to provide for his wife, Nancy, but keep the farm in the family too. So he created a very, very good plan – and there’s a very good chance his plan will hold up, but now 1) Nancy and Ron’s relationship may be done-zo and 2) they’re both paying lawyers … dare I say, unnecessarily.
Lastly, before I wind things up on this story, I must say that regardless of what happens to Chuck’s grand plan – he put his wife and family at least in a position to succeed – if they choose to crash his plan, that’s a shame. Can you imagine, though, if Chuck had done NO planning at all? It would be, perhaps, an even bigger mess and his intention of “keeping the farm in the family” probably would not have carried out. So at the very least, let that be a final takeaway from this story – A PLAN is better than NO PLAN.
I was giving a presentation recently and an attendee asked me … “Jenny, my Mom and Dad are divorced, my Dad remarried, and I want to chat with him about this ‘estate stuff’ but I don’t know how. I’ll be seeing him soon at the holidays…” She said it almost-insinuating that maybe she’d chat with her Dad at an upcoming get-together.
You know, every family is different – some are SUPER open and comfortable talking about this sort of stuff, but I would say most blended families aren’t. And sometimes they aren’t – and it’s not in a bad way. It’s just “they don’t talk about this stuff.” I encouraged her to set up a time for her and her Dad to grab coffee, dinner, or something to bring it up – especially since she was part of a blended family. Start the conversation privately, and see where it goes from there…that’s my two cents.
Alrighty, enough of this craziness! As we approach Thursday, I hope you all take a moment to reflect on what you’re grateful and thankful for – and for those that have lost loved ones, who are normally “at the table” please know you’re not alone – and many are thinking about you and your family. And for those that still have a table filled with family members, remember to embrace the moment – It won’t be like that forever. Put the squabbles aside, and enjoy the time with your family and friends.
Next week’s topic is a current event/current trend -- something I’ve seen or run across that I think would be interesting on here. So yeah – we’ll talk something “current” next time – Until then, Legal Tea Listeners…be well and I hope you all have a very happy Thanksgiving – oh, and remember to wear your stretchy pants!