Hey there, Legal Tea Listeners –This is your host, Jenny Rozelle! Today’s episode of Legal Tea is a cautionary tale, where we talk about real-life cases with real-life clients with real facts – they’re things me or my office have worked on. For today’s episode, we’re going to be talking about a case my office worked on a handful of years ago where our client, let’s call her LuAnne, had a family, of course, but no children living (she had a child, but the child passed away before her). So, in her estate plan, things were left to her closest relatives – namely, nieces and nephews. The issue? The nieces and nephew didn’t exactly get along. The bigger issue? She decided to appoint ONE of them as the Executor and Trustee in her estate plan – which about resulted in World War III.
Before we really dive in, if you recall, the last Legal Tea “cautionary tale” episode talking about naming a bank or financial institution as Executor or Trustee – and discussed some things to consider if you name a bank or financial institution. This episode is such a beautiful follow-up to that because today’s big message to you all is “You don’t HAVE to name a family member as the Executor or Trustee in your estate plan.” I think it’s a beautiful follow-up to our last “cautionary tale” episode because it’s a reminder to you that there is a lot to think about when it’s time for you to #DoYourEstatePlan. I think that sometimes people just have someone like me, an estate attorney, flop names in the document without really thinking, “Is this going to be the BEST option I have to serve in XYZ role?” And no, for the love of goodness, it does not have to be a child … and definitely not the oldest child!
Okay, so back the THE cautionary tale …
LuAnne came to our office many years ago – like, even before my time at the office, and she came with an existing Revocable Living Trust (that was created prior to our office’s involvement). She wanted to come in to make some changes to her Trust. That’s a fairly normal request … that a “new” client to us has an existing estate plan that they want updated. This change would have been her fifth Amendment to her Trust. You know, there are some clients that are just chronic change’ers … and hey, that’s fine. She was one of them. Having five Amendments is quite a few. Instead of doing yet another Amendment (a sixth one), we chatted with her about doing a Restatement – that way, it’d fully replace her existing Trust and be able to incorporate all the changes in all the Amendments AND allow her to make whatever changes she was then wanting to make.
I’ll take two seconds to discuss why this was a good idea for her to do. Every time an Amendment is done, that is yet another document “in the mix” meaning it’s just another document to keep track of and not lose. So, LuAnne had her existing Trust document and five Amendments … and she was wanting to do a sixth one. What if she misplaces one of them … what if she misplaces more than one of them? Then we have no idea what changes occurred in the missing Amendments. A Restatement fully replaces the existing Trust while incorporating all the changes meaning you don’t have to keep and not lose several documents – we’re back to one document, which is clearly way easier to keep track of AND easier for your Executor/Trustee down the road (since we’re only looking at one document rather than having to keep tabs/track all the changes made in 5, 6, 7 documents!). It’s smart to at some point … stop, incorporate all the changes in all the documents, and get back to a single governing instrument.
So, that’s exactly what LuAnne did. She chose to do a Restatement. When doing a Restatement, it’s kind of like a blank canvas … we get to, sort of, restart with who-is-where and what is happening. The two big changes LuAnne was wanting to make was to remove her deceased child from her plan to leave things to her nieces and nephews … and to change the Executor/Trustee to a trust company/corporate fiduciary. The establishment she had been talking to was reputable in the community and was known for being a trusted resource for individuals to use as Executor/Trustee in an estate plan. So, this change really didn’t surprise us, for that reason. Those changes were made through a Restatement and we all moved on…
Fast forward about three years…
We hear from LuAnne and she wants to make changes again. Again, that’s fine; that’s okay. It’s best to keep your estate plan nice-and-updated, obviously. So we bring her in and she wants to update her Executor and Trustee. Unfortunately, the well-respected and established trust company she had named had been bought out (remember me talking about this in our last “cautionary tale” episode?! I don’t make this stuff up, people!); anyway, the trust company had been bought by a bank. LuAnne was not a big fan of this bank, so she thought, “Well I don’t want that bank to be the one in charge after I pass away – so I need to come up with someone else!” That’s what she was coming in to discuss with us and make changes on. Ultimately, LuAnne decided to put her niece in charge because “she’s the only one that is local.”
While I did not meet with LuAnne back then, I’m sure a similar conversation occurred with LuAnne had it been me in the room – I always tell people that there are a NUMBER of factors that should go into deciding who-to-put-where. Is being local helpful? Sure. Is it the only deciding factor? No. Some of the factors to consider are:
Skillset – Are they organized, efficient, and communicative?
Location – Sure, some things are a tad easier to do if the person is local.
Relationship – Does that HELP or does that HURT things?
Job – What is their job? Is it so demanding they may slack in the role? Are they unemployed and look to capitalize on your Estate? (I say that seriously!)
Beneficiaries – Are the beneficiaries contentious? If you pick one of them, is it going to make things even worse? Or are they ready to kumbayah and support the Executor/Trustee?
Family dynamic – i.e. Blended family…?
So yeah, when people say they’re going to simply pick the oldest or the closest, I usually try to push them a little and confirm they are thinking about it from a 50,000 view overview and not thinking too simplistically. Looking back, I sure wish that LuAnne would have picked someone else. Did we all make it out alive? Sure. But it was soooo contentiousness. Why was it that way? I think now that we’re far on the other side, there were two points of contention: First, the nieces and nephews did NOT get along beforehand, so putting money on the table AND picking one of them as the “one in control” – the ones NOT in control were constantly looking for reasons to point out flaws, mistakes, and issues with the one in control. Second, the one that LuAnne DID pick was actually unemployed at the time and charged a rather large (and in my opinion, silly) fee to serve in the Executor and Trustee role.
Ultimately, the choice is yours – if it’s your estate plan, you pick who-is-where. What I can tell you is that I think LuAnne did not choose the right person. One of the main reasons the nieces and nephew fought was due to the person that was selected … I’m 99.9999% sure that if it was a total third party, unbiased person serving in that Executor/Trustee role, things would have gone so smoothly. The ones that were NOT the Executor/Trustee simply were picking at every little thing that the niece did … and ever questioned things that happened BEFORE LuAnne put the niece as the Executor/Trustee. At one point, I had to shut down their questions because again, they were just picking at the smallest of things … and things that didn’t even involve the niece, who was the Executor/Trustee. Like, they wanted to know HOW LuAnne came to pick the niece … and WHY LuAnne picked the niece. I remember thinking, “I wish LuAnne didn’t pick ANY of you!”
Thankfully for the family, I was able to keep the family at bay and not start suing each other. Were there fights between all of them? Definitely. Though, I have to give myself a pat on the back because how I prevented that family from not suing each other … I’ll never know. Crazy enough, they had sued each other before over things, so was it a legitimate concern of mine? For sure. But they didn’t. Thank goodness. That would not have been good for anyone – not good for them (it would have been so much more in legal fees); not good for us (we would have definitely had to get involved and probably gotten deposed/served as witnesses); not good for the estate (would have certainly delayed things); etc. Though, like I said earlier, I know hindsight is always 20/20, but I really don’t think it would have even been on the verge of litigation if LuAnne had picked anyone else outside the nieces and nephews, but someone else, of course, that was capable.
If LuAnne didn’t have anyone else close to her (relationship-wise) and capable, that’s when people start looking at third parties that are professionals in this work – whether it be a bank or financial institution (which comes at a cost, but so does litigation if you pick the wrong person!) or whether it’s a professional like an attorney or accountant (which, too, come at a cost, but usually not as expensive as a bank or financial institution – but what happens if something happens to that person after you appoint them in your document?). What is NOT off the table is someone that is close-ish to you, but maybe not family, but DOES possess a solid skillset. Say you have a dear friend’s child who would likely do really well in this type of position. There’s just so many things to consider, right? What’s kind of annoying, too, is that you know your people the best – I, like the estate attorney, don’t. So, what I’d encourage you to do is just genuinely and thoroughly look at the options, list pros/cons, go through the factors I mentioned earlier, and hopefully you can come up with a solid answer.
Alrighty … let’s wrap this episode up and shift to a sneak peak of next week. We are back to the current events/current trends topic – where we talk about something I’ve seen or run across, maybe on the news or social media, that I think would be interesting on here. During next week’s episode, we’re going to talk about a few lines of Taylor’s Swift’s new song, Anti-Hero, and how it subliminally references a rule in my little estate world called the Slayers Rule. Did you ever think we’d talk about a Taylor Swift lyric here on Legal Tea? There’s a first time for everything! Until next Tuesday, Legal Tea Listeners, take care and be well!