Jenny Rozelle, Host of Legal Tea
Cautionary Tales - Estranged Family & Estate Planning - Episode 15
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!
Before we jump in, this is episode #15 – I’m not sure where the last 15 weeks have gone, but time sure does fly! It’s fun to look back to when I thought, “Hey – Maybe I’ll start a podcast!” and now today, being 15 episodes deep. There was a lot of prep work that was done before the podcast even started – and each week, there’s a lot of prep work done in writing, recording, scheduling, etc. So I hope you all have enjoyed it as much as I have enjoyed it!
Let’s get down to business, shall we? Today’s cautionary tale is on a client that when we met with him (let’s call him Brad), he had started showing signs of a serious hereditary disease called Huntington’s Disease. Before I continue chatting about Brad, I’m going to take a minute to talk about Huntington’s Disease –because I think it’s important to bring awareness and provide some education on it. Maybe if a Legal Tea Listener learns about it, they may be able and willing to support an organization that helps individuals (and their families) who have Huntington’s Disease.
Prior to being in the estate and elder law business, I frankly don’t think I had ever heard of Huntington’s Disease. One day, my office was contacted to be a guest speaker at the Huntington’s Disease Society of America Annual Symposium (for the local Indiana Chapter) in Indianapolis, Indiana. It was the invitation to speak that first introduced me to Huntington’s Disease.
According to the Huntington’s Disease Society of America’s website, Huntington’s Disease is “a fatal genetic disorder that causes the progressive breakdown of nerve cells in the brain. It deteriorates a person’s physical and mental abilities usually during their prime working years and has no cure.” The word “fatal” … it just stops me in my tracks. Furthermore, an element of Huntington’s Disease is that it’s extremely hereditary – from their website, they explain it as: “HD is known as a family disease because every child of a parent with HD has a 50/50 chance of inheriting the faulty gene.”
If you’d like to learn more about Huntington’s Disease and/or check out local chapters, head to HDSA.org or there’s a direct link to the website on Legal Tea’s website on this episode’s transcript, where source links are located.
So back to Brad…
Brad landed in our office because he recognized the need to get some basic documents in place – such as a Living Will, Health Care Proxy/Power of Attorney and Financial Power of Attorney. It was within that meeting and conversation, that we learned he was relatively-estranged from his family – and instead of putting family in these types of estate planning roles, he wanted to put some close friends of his.
I think he chose the right people because as the disease caused him to decline, his friends stepped in and helped him – just like they were his family. For example, it was discovered that Brad had not filed taxes in nearly 10 years – so the friend got a hold of us for a referral and we got them over to a trusted Accountant. Check! Got that cleaned up.
After we got his basics in place, attention then shifted to getting some sort of Last Will and Testament or Trust in place to ensure Brad’s assets went to where he wanted after he passed away. There was some discussion of getting an Asset Protection Trust in place to ensure his assets were protected if he had to go into any sort of long-term care facility (due to the disease’s impact on him). Another reason this was an important consideration was because Brad had shared about his estranged family – and that he did not really want his assets to go to them. Well, WITHOUT an estate plan, his assets would be heading their way…
I think I have shared this before, but my estate and elder law world is filled with “You can lead them to the water, but can’t make them drink it” moments. Only the client can drink the water. Well, Brad didn’t drink the water. I’m not sure why he was like this – maybe it was because he didn’t know who he’d want as beneficiaries, maybe it was because he thought he had plenty of time to decide, who knows… All I know is he never did a Will … never did a Trust.
Some time later, we heard from one of his friends (that Brad appointed as his Financial Power of Attorney) that Brad’s condition has continued to worsen – and as it has worsened, Brad’s denial of his condition had dramatically increased. So sad. Breaks my heart. So his friend, coming from a good, honest place, reached out to figure out what their options were – we shared what their options were … that is, 1) leave things as-is and just continue to operate in his best interest; or 2) entertain utilizing a guardianship.
We presented the options, and then gave them space to weigh the options. The next time we heard from anyone regarding Brad was that he had passed away. It was only about a week after our last conversation with Brad’s Power of Attorney.
You may know where this conversation is going…
Brad made a great decision to get his Living Will, Health Care Proxy, and Financial Power of Attorney in place – after all, the friends of his that were willing to step in to help did a wonderful job, got things organized, helped keep things managed and on the up-and-up. For example, after much work, they got his taxes all straightened out – remember how I said Brad had not filed taxes in 10 years? Having that cleaned up will surely pay off – that way, the IRS won’t be all confused when it’s time to file his final personal tax return and eventually, his estate tax return. It’s never a good idea to confuse the IRS…
However, Brad never created any Will or Trust, if you recall. All of his assets were in his name alone and he didn’t have any beneficiaries designated on assets. So, if you’ve listened to some of Legal Tea’s past episode, you surely know what this means. Brad’s estate went by the Indiana intestacy statutes. These funny-named laws are built in the Indiana Code for individuals that pass away without an estate plan – and think of it as a built-in estate plan for you (when you don’t have one!). That sounds all fine and dandy, right?! … Wrong.
The thing about the intestacy statutes is they’re often not what you’d think would happen – i.e. If you’re married and have a child or children … if one spouse passes away (depending on how assets are owned), then the surviving spouse is entitled to ½ and the child/children are entitled to ½. So many would think, “Oh – everything will go to my spouse!” Nope…
So how does the Indiana intestacy statutes work for Brad’s estate? Remember those estranged family members? That’s where it’s heading. Which breaks my heart. And now it’s too late to change. It’s going to them – there’s nothing his friends can do at this point. They’re left with how Brad left things – which I’m sure made his estranged family members happy campers.
Furthermore, because no one is named in a Will or Trust to “take over” after Brad passed away, everyone, sort of, was looking around and pointing around … like “Are we supposed to be taking over? You?” From what I gathered, the estranged family members wanted nothing to do with “putting in the work” to get Brad’s estate administered.
Because Brad’s friends are just really good people, they agreed to step in and continue running with the baton on Brad’s affairs. These poor friends of Brad – all the assets got frozen on them, which is a super normal thing that happens when people pass away, so like for the funeral expenses, none of the family members wanted to help chip in (or could chip in), so THEY, the friends, paid for it out-of-pocket. (Side note: we go them reimbursed, but still. STILL!)
Most states, and I wouldn’t be surprised if all states allowed for this, allow for service in these types of roles – like, Executors, Personal Representatives, Guardians, Trustees, etc. – to be paid a “reasonable compensation.” That’s Indiana’s standard at least – that it’s reasonable. I often wish there was some magical math equation to put numbers in and it spit out, “Here’s your compensation rate…” There’s not. It’s a total gut check.
I’ve represented people in these types of roles get paid $15~ an hour; I’ve seen professionals serve in these capacities (think, attorneys, accountants, financial professionals, etc.) for their hourly rate … like $200/hour, $300/hour, etc.; I’ve seen people take “x” percent. There’s so many different methods – so long as you can justify your fee and be willing to argue for your rate, even in a Court of law, that’s what I mean by it being a gut check. If I had a non-professional client wanting to take $100+/hour, I’d recommend they rethink that decision. I had a client once take $75/hour and his siblings fought him.
I recommended to Brad’s friends that we get AHEAD of this conversation and have the beneficiaries of Brad’s estate agree to what compensation method/rate Brad’s friend would take – that way, it’s not a “surprise” at the end of the estate administration. So, if there’s any good in this story, it’s that we got Brad’s friends reimbursed for anything that they paid out-of-pocket for (which was not JUST the funeral) as well as got them compensated for their hard work, time, energy, etc. Goodness sakes, they deserved it.
So yeah – here we are with another crazy “real life” story for you, Legal Tea Listeners. I saw a client recently (outside the office) and they were sharing they had been listening to my podcast and had just finished the episode that my husband, also attorney, Justin, co-hosted with me – they were like, “That story was really real?!” Yes, friends – these cautionary tales are real-life people that I, or my office, has helped. Who knew this wonky stuff happened in boring ol’ Indiana, huh?
Anyway… For all you people that have estranged family members, please #DoYourEstatePlan. For your OWN peace of mind. Heck, I’ll be here to help you #DoYourEstatePlan and even be here, when you fail to … so how about you just get it done?
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. Well, next week will be fun – I got a lead from a team member of mine (shout out to Cara!) who stumbled across a documentary on Bob Ross on Netflix. Specifically, the documentary goes into the people in his life before he passed away, and what happened (to his stuff/estate and those people) after he passed away…
Until then, Legal Tea Listeners…talk soon!