Cautionary Tales - Navigating Estate Plans with Estranged Family - Episode 189

Hey there, Legal Tea Listeners –This is your host, Jenny Rozelle! Today’s episode of Legal Tea is the “cautionary tales” topic. And on these “cautionary tales” episodes of Legal Tea, we normally talk about real-life cases with real-life clients that are things me or my office have worked on -or they are things that I think are generally good things to be aware of, so you don’t turn into a cautionary tale on my Legal Tea podcast one day! Well, today we are going to be talking about estate planning involving family members that you either have a strained relationship with OR that they are totally estranged … not strange. ESTRANGED. As in there’s very, very little or no relationship with that person. And specifically, what to do about those types of people in your estate plan. To sort of exemplify what I am talking about, I want to share a story to make this topic very, very real.  

Today’s cautionary tale is on a client that when we originally met with him (let’s call him Brad, which of course is not his real name), he had started showing signs of a very serious 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. Transparently, there was a day not long ago that I had never heard of Huntington’s Disease, then my office was asked to speak at a conference for the Huntington’s Disease Society – and from that, we have helped quite a few folks who are impacted with Huntington’s Disease. 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 -or- at the very least bring some awareness of it.

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 honestly makes my heart hurt. Furthermore, an element of Huntington’s Disease is that it’s extremely hereditary – from their website, they explain it as: “HD [Huntington’s Disease, for short] is known as a family disease because every child of a parent with HD has a 50/50 chance of inheriting the faulty gene.”  So, if you’d like to learn more about Huntington’s Disease and/or check out local chapters, head to HDSA.org. Okay, now back to Brad…

Brad, who had been diagnosed with Huntington’s Disease, landed in our office because he recognized the need to get some basic documents in place – such as a 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. In my professional opinion, I think he chose the right people because as the disease caused him to decline, his friends jumped in without question and helped their friend – 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. They dove in and got stuff done!

Now, notice that when I said we got some basics in place – I did not mention any type of Last Will and Testament. But, after we got those original basics in place (the healthcare and power of attorney documents), 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 a Will or Trust, 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 sadly here, 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. Nothing. Time passed and we heard from one of his friends that Brad’s condition had continued to get worse – and as it worsened, Brad’s denial of his condition (and it getting worse) increased. 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 process.

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 that last conversation. You probably know where this conversation is going…

Now, Brad made a great decision to get his 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 an absolutely wonderful job, got things organized, helped keep Brad’s finances 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 seriously was so helpful – that way, the IRS was not all confused when it became time to file his final personal tax return and the estate tax return. I mean, this probably goes without being said, but it is never a good idea to confuse the IRS…

Sadly, Brad never ended up creating any Will or Trust. 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 episodes, you surely know what this means. Brad’s estate went by our state’s intestacy statutes. These funny-named laws are built in the 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!). So how did the intestacy statutes work for Brad’s estate? Well … remember those estranged family members? That’s where his estate, his assets (which were not a little amount) ended up going. I remember Brad’s friends asking if there was anything that could be done because “there’s no way he’d want things to go to his estranged family.” They knew the answer … and I confirmed that there was not. (Of note, too, they were advocating for his estate to go to, say, charitable organizations they feel he’d be passionate about – they were NOT advocating for them to be the beneficiary or anything!)

Also, because there was no Will or Trust, there was no one named to “take over” as Executor after Brad passed away, so 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. But they’d happily be the beneficiaries! Well, 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 did get them reimbursed, but still. STILL!)

Most states, and I wouldn’t be surprised if all states allowed for this, allow for people serving in these types of roles – like, Executors, Personal Representatives, Guardians, Trustees, etc. – to be paid a “reasonable compensation.” That’s my state’s standard at least – that it has to be 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. 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 and sometimes, the percentage is set by state laws/statutes. It’s a bit all over the place.

Anyway, at this point, 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. I was a bit worried that the family, the beneficiaries, would get all weird near the end on these poor friends, so it was a bit of a strategic move, but it worked in our favor. 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, by the way) as well as got them compensated for their hard work, time, energy, etc. Goodness sakes, they deserved it.

You know … estate planning isn't just paperwork—it's about protecting your intentions, especially when family relationships are complicated. This case perfectly illustrates what happens when someone takes half-measures. Brad made smart initial moves by designating healthcare and financial powers of attorney to trusted friends rather than his estranged family. These friends proved their worth, handling his affairs admirably and even sorting out a decade of unfiled taxes. But by not completing a will or trust, Brad's partial planning created an unfortunate outcome. This story powerfully demonstrates why "halfway" estate planning simply isn't enough. When family relationships are strained, complete documentation becomes even more critical to ensure your wishes are followed and the right people are recognized for their care and support.

Alrighty, let’s shift to a sneak peak of next week, which we’re circling back to the “current trends” topic where we talk about things that are going on currently that impact my estate and elder law world – or maybe, things that I have stumbled upon on the news or social media that is relevant to this podcast. Well for next week, we are going to talk about all these college students bringing in the dough and making money … through NIL and why I am hopeful there are people around them encouraging them to do at least basic estate planning. So tune in for that next week, Legal Tea Listeners, so until then, be well and talk soon!

Sources:

https://hdsa.org/