Cautionary Tales - The Elephant in the Room: Estate Planning Edition - Episode 261

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, that way you do not turn into a cautionary tale on this podcast one day! Well today we are going to talk about something that almost every family has, but almost nobody really wants to say out loud. I usually call them the “elephant in the room” issues, or if we’re being a little more honest about it, the skeletons in the closet. And I don’t mean that in a dramatic or sensational way. I just mean that in almost every family, there are dynamics, relationships, histories, and patterns that exist under the surface. Sometimes they’re mild, sometimes they’re significant, but they’re there. And every once in a while, someone will sit in a meeting and say, “Oh no, everything is totally fine in our family, there’s nothing complicated at all,” and honestly, that’s usually the moment where we pause internally and think, either this is the most uniquely conflict-free family in history, or we just haven’t gotten to the real conversation yet.

Because estate planning is not just about dividing assets. It’s not just about documents or tax rules or legal structures. At its core, estate planning is about people. It’s about behavior. It’s about relationships and responsibility and what actually happens when money changes hands without you here to guide it. And that’s where things get real, because the plan that looks perfect on paper can fall apart pretty quickly if it doesn’t account for how people actually act in real life. So when we start asking questions that might feel a little more personal or a little more layered than people expect, it’s not because we’re trying to dig into family drama. It’s because we’re trying to build a plan that actually works in the real world, not just in theory.

One of the most common examples of this comes up with a child’s spouse or partner. This is something that many families have thought about, even if they have not said it out loud. You might have a child that you love deeply and trust completely, but their spouse or long-term partner is someone you do not know as well, or maybe someone you do not fully trust with money, or maybe even someone you just have concerns about in terms of financial decision-making or stability. And this is where estate planning gets interesting, because most people assume that if they leave everything to their child, then that inheritance is automatically “safe” within that family line. But that is not always how it works in practice. Once assets are inherited outright, they can become intertwined with marital property, they can become exposed in a divorce, and they can become part of a financial ecosystem that includes people you never intended to have long-term control over that money.

So when we see that kind of dynamic, the solution is not to cut anyone out or make assumptions about relationships. The solution is structure. And usually that means setting things up in a very intentional way. Instead of leaving assets directly to a child, we can leave them in a protected structure where the child is still the beneficiary, still supported, still able to benefit from the inheritance in meaningful ways, but the assets themselves are not directly owned in a way that exposes them to a spouse or future spouse or a divorce proceeding. That means we can control how distributions happen, we can protect the assets, and we can make sure that what you intended for your child actually stays tied to your child, regardless of what happens in their marriage over time. And I always make the point here that this is not about assuming a marriage will fail. It is about acknowledging that life changes, relationships evolve, and we don’t want your life’s work unintentionally redirected through a future legal proceeding that has nothing to do with your intentions.

Another really important category that comes up, and one that families are often more hesitant to talk about, is addiction or substance use concerns. This is one of those areas where people often soften the language a lot. They’ll say things like “there have been some challenges,” or “we’re a little concerned about stability,” or “we’re not sure how things will look long-term.” And sometimes that’s quite understated, and sometimes it’s exactly accurate, but either way, it creates a very different planning environment than a simple outright distribution would.

Because if there is a real concern about addiction or self-destructive financial behavior, then handing someone a large inheritance in a lump sum can unintentionally make a difficult situation worse. Not because the person is bad person, but because large sums of unrestricted money can accelerate existing struggles. So in those cases, we shift the structure entirely. Instead of thinking in terms of “here’s a lump sum,” we start thinking in terms of controlled access over time. We might design distributions that happen periodically instead of all at once, or we might limit distributions to specific categories like housing, medical care, education, or direct payments to providers so the money is used in a supportive way rather than a discretionary way. And in some cases, we essentially create a system where the inheritance acts more like a long-term support structure than a cash event.

The key point in all of that is that the goal is never punishment or restriction for its own sake. The goal is protection. It’s making sure that the money you have built over a lifetime is actually helpful to the person receiving it, rather than something that creates additional instability. And again, none of those protections can be designed properly if we do not know the situation exists. We cannot build safeguards around something we haven’t been told about.

A third example and very common situation is what I will call subsidizing a child’s financial life. And this one is interesting because it often does not feel like a “problem” when it’s happening. It feels like parenting. It feels like helping. It feels like stepping in when your child needs support. Maybe it’s helping with rent, or paying a bill here and there, or covering gaps when things get tight, or just consistently being the safety net when life doesn’t go smoothly for them financially. And none of that is unusual. In fact, it’s extremely common.

But where it becomes relevant in estate planning is that it can quietly create uneven lifetime support among children without anyone formally recognizing it as such. So when we get to the point of dividing an estate equally, some parents will suddenly pause and say, “Well wait a minute, I’ve actually been supporting one child significantly more over time than the other.” And that realization can lead to a very different conversation about fairness, intent, and what equal actually means in the context of the family.

So what we do in those situations is we simply bring it into the open. We talk about it directly. Not to assign blame or audit past decisions, but to understand intent moving forward. Do you want everything to be strictly equal regardless of what has already been given? Do you want lifetime support to be considered part of someone’s overall inheritance? Or do you want to make adjustments to reflect those differences in a more formal way? And the important part is not necessarily which answer you choose, but that you choose it intentionally, and that it’s documented clearly so it doesn’t get misinterpreted later by children who are trying to make sense of decisions without the context you had when you made them.

And that idea of documentation matters more than people think. Because even if you make the most thoughtful, balanced decision in the world, if there’s no explanation or no record of intent, families are often left to fill in the gaps themselves. And when people fill in gaps in estate planning, they usually do not assume neutrality. They assume meaning. They assume favoritism or conflict or secrecy or influence. And that’s where a lot of family tension starts years down the road.

There are other versions of this same theme as well. Estrangement, for example, is one that comes up more often than people expect. Sometimes there is a child who is simply less involved in the family, or relationships have cooled over time, or there is emotional distance that has developed over the years. And families often struggle with what to do about that. Do you treat everyone equally regardless of relationship? Do you reflect closeness or involvement in the plan? Do you try to correct for history or simply ignore it? And again, there is no universal answer. But there is a universal requirement for clarity. Because ambiguity is what creates conflict. Not necessarily unequal treatment, but unexplained treatment.

So when you step back and look at all of this together - spouses, addiction concerns, financial support patterns, estrangement - the common thread is not the complexity itself. The common thread is that real families are complicated. My husband, Justin, who is an estate attorney too, often says, “Estate planning is not difficult. People, personalities, relationships, etc. the PEOPLE make it difficult.” That’s so true. Estate planning only works when we’re willing to acknowledge that complexity instead of simplifying it into something it is not.

And I always come back to this idea with clients: the goal is not to create a perfect family situation. The goal is to create a plan that still works even when the situation is imperfect. And the only way we can do that effectively is if we’re working with the full picture from the beginning, not just the polished version of it. So when we, people like me – estate attorneys, that is – ask these questions and talk through these topics, it is not about digging for problems or looking to make you tear up. Rather, it is about building an estate plan that can actually hold up in the real world, long after our conversations around the conference room are over.

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 are relevant to this podcast. Next week, we’re going to get into a new-ish topic – one that I’m surprised I haven’t done an episode on actually! – and that is on airline miles/points, hotel points, etc. and what happens to them at your passing. This is one of those things that may evolve over time, especially as more and more people do the points and miles game … I’m sure companies will become more restrictive about how they work with my estate law world. Anyway, so yeah - we’ll get into all of that next time. I’ll talk to you then, Legal Tea Listeners, be well and take care!

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