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  • Writer's pictureJenny Rozelle, Host of Legal Tea

Cautionary Tales - Post-Divorce Collaborative Estate Planning - Episode 106

Hey there, Legal Tea Listeners –This is your host, Jenny Rozelle! Today’s episode is a “cautionary tale” topic/type of episode and usually on these episodes, we go into a real-life, real-client story that I, or my office, has worked on – that usually is a messy-something that happened, and that you should learn from. Well, today is a bit different because today is almost like a it-could-have-been-a-cautionary-tale had the clients not done what they did. Which, I get it, is kind of like the WHOLE purpose of estate planning … to NOT turn into cautionary tales, but basically I just want to talk about this client, this story, their situation because it’s SO unique, but I’m guessing you may find this topic interesting, especially if you have folks in your life that have divorced, but do a great job at putting their kids first and foremost. This topic, this episode is for that kind of couple, that kind of situation! So, let’s just dive in, shall we?

Alrighty, let’s meet the clients – their fake names, for purposes of this episode, are going to be Joe and Natalie. So, Joe and Natalie are in their early 40s and together, they have 3 children – Johnny, Susie, and Frankie. Also fake names. I guess my brain, as I make those names up, like names that end in Es. Anyway, so about five years ago, Joe and Natalie got a divorce. It was fairly amicable and honestly, as they put it, they, sort of, just drifted away, developed different interests, etc. As a byproduct, they mutually wanted to part ways – but it was important to them to united for the kids and always put the kids first. Now, I know a lot of people say that, but the story I’m going to share today is them actually putting that into action. You’ll see.

So a handful of months ago, my office got a call from Natalie (she’s the wife/mom) and Natalie shared that her and ex-husband were wanting to get some estate planning done – and she said, “I know it sounds kind of strange, but we’d like to use the same attorney, if possible, and even attend the meetings together, like at the same time.” We, of course, do not get this type of request every day and heck, I’m not sure if I’ve heard of this at all really in my almost-12 years. Anyway, so the team member that took the call basically said “Well, let me check to make sure that is okay before I schedule something with both of you.” So, that team member shares with me and I was like, “Huh? What?” Initially, my brain went to ethics/compliance of legal ethics rules – and I thought, “I don’t think that’s a good idea!” But then, I was like, “Well if they are willingly coming in together, surely they’d waive the possible conflict of interest that helping both of them would cause.” The more I thought about it, the more I got confused as to whether it was REALLY a conflict of interest or not. I kind of feel like no – but I could be wrong.

Fast forward a few weeks, I’m flipping through my files for meetings that day and notice that there are two files rubber-banded together. Once I saw “JOSEPH” and “NATALIE” (their names), I was like, “Oh this is that divorced couple that wants to do estate planning together.” So, later that day, it’s meeting time – I was notified that they were in the conference room and as I approached the door, I was like, “This is either going to go really well and be a really cool thing/experience ... or this is going to go really bad and I’m going to have to play referee, and maybe even decline to represent them.” I walk in and I am greeted with big smiles – they’re on the same side of the table and as I get close, we introduce ourselves and sit down. I said something like, “Well, this is a first for me!” We all had a chuckle, then got down to business. We start talking about what they are trying to do – that, they are divorced, they do NOT want to make anything joint/co-mingle anything, but they’re both ready to do their estate plan … and since they are very separate individuals now, they want their estate plans to “play nicely” with one another to ultimately best support their 3 kids, Johnny, Susie, and Frankie.

The way my office works is that the first meeting is more of an introduction meeting – we get to know each other; I hear their goals; I share what options exist to accomplish those goals; etc. Usually, unless it’s some sort of crisis/emergency type of estate planning, no decisions are made at that first meeting – as in who is in charge of health care decisions, who is in charge of money, who is in charge of the kids, how do the kids inherit, etc. That all occurs at the second meeting. So, that first meeting with Joe and Natalie happened – I shared with them my thoughts on options, and we got the second meeting scheduled to have them come back. Before they came back, I gave them a tool we have that helps clients prepare for the hard questions that occur at the second meeting – so it’s basically a tool that helps them analyze and decide their “answers” before the meeting. For them, I really encouraged them, on a handful of questions, to get on the same page and even work on it together.

So, the second meeting happens – Joe and Natalie are there, still smiling/laughing like they were in the first meeting, and we dive into the questions and their answers. They jokingly shared that a few of the questions resulted in a little bit of a disagreement, but otherwise, they got through it together in one piece, unscathed. I gave them kudos because if anything was going to be the straw that broke the camel’s back, it would have been them coming to an agreement on who got the kids if something happened to both of them, how the kids inherited, who managed the kids’ inheritances, etc. That’s when they shared the piece about there being a couple disagreements, but WWIII did not break out – so win, win. Decisions were made and WWIII didn’t break out!

So, to kind of go into how their plan is setup – they both elected to do very simple revocable living trusts. That way, they could provide super specific instructions on how the kids inherited, kept things out of probate, AND allowed them to, at that point, consolidate the kids’ inheritances to “one bucket” each from their parents. That way, Johnny would not have a bucket from Mom, bucket from Dad; Susie would not have a bucket from Mom, bucket from Dad; and Johnny would not have a bucket from Mom, bucked from Dad. Instead, Johnny gets a bucket that both Mom and Dad’s will dump into ONE bucket; same with Susie and Frankie. Their plans are doing EXACTLY what they wanted to do, as they shared in that first meeting – where they didn’t want to join/combine/co-mingle assets NOW, but they wanted to collaboratively do a plan to support their kids. Rather than plan being a little clunky (like each kid getting two buckets), they wanted things to “combine” at that point (into the one bucket per kid).

So, really their estate plans about mirror each other – they put the same people as “guardians” of the kids if something happened to both of them (that was one of their disagreements – Joe wanted his parents, Natalie wanted her parents, so they ended up figuring out a happy medium solution) … they put the same people as the managers of the kids’ inheritances, so if something happened to them sooner than we want to talk about, there is a staggered distribution based on age that the manager would monitor, execute on, and deal with. While they have the same people for roles that deal directly with their kids, they do have different people for, say, health care power of attorney – and they have different people navigating financial and legal affairs if one dies, but the other is still living. All in all, they should be proud of themselves – collaborating on an estate plan to put the kids. Honestly, I’m proud of myself for my work product too. I, of course, 10000% don’t want anything to happen to them, but if something did happened, their plans are setup so beautifully … which, at the end of the day, is peace of mind and that’s the whole purpose of estate planning, right?

Joe and Natalie are perfect examples of estate planning – and why actually doing an estate plan is so, so important. They are also a beautiful example of embracing a situation, taking the bull by the horns, and getting things done. They could have easily tried to do planning individually – and it would have been doable, but this plan, this plan is chef’s kiss. Their plan is like a Range Rover – hang with me on my example. Doing a plan individually and without collaboration would have been like a Honda Civic. That plan would have been dependable and … fine. Nothing wrong. But the plan they chose, the Range Rover plan, is not only dependable, but it’s more than fine. It’s great. It’s dang near perfect. Now, the use of the word perfect makes me think of something… What if either or both get remarried to new people? What if life changes? What if, what if, what if?

You know what, I’d actually venture to argue that something WILL change at some point. They are only in their early 40s and ideally, they have a long, long life ahead of them. That long life may bring new challenges and different goals from an estate planning perspective. In the event that something does happen, we cross the bridge then – we deal with things then, we make adjustments/changes then. Through our meetings and conversations, they were commitment to reviewing things at least annually. Reviewing assets, reviewing documents, reviewing life changes, etc. So long as they stay committed to that, any changes to their documents, we’ll be able to address – not to mention, since I did both their plans, I’ll be able to know when things need to change for both. Though, so long as they keep their #1 goal in mind of putting their kids first and foremost, their estate plan will probably stay fine and dandy.

So, if you know of a couple like Joe and Natalie, or someone different than maybe is divorced but should consider estate planning to mutually collaborate for kiddos, share this episode with them. A 15 minute episode could save them 1000s of dollars in legal fees for messing up estate planning; could save their family/kids heartbreak and headaches for screwing up estate planning; and could decrease the likelihood of disagreements occurring down the road. Maybe something I say will help them when it’s time to do their estate plan. Alrighty, it’s time to wrap this episode up because I’m running out of time, my friends, and shift to a sneak peak of next week. Next week’s topic will be a “current trends” type of episode and during that, I will be going to be going through some step-by-step instructions or maybe they’re just considerations … are you ready for it? … if you hit the lottery. I often say during meetings, “If you hit the lottery, don’t tell anyone and come see me!” I said it last week and I was like, “Heck, why don’t’ I just do a Legal Tea episode on my thoughts, so if anyone actually does hit the lottery, they have a resource. Not like this is probably going to land in their hands, but hey, maybe we’ll try! Anyway, I’ll talk to you next week, my friends. Have a great week and talk to you soon. Bye bye!



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