Seniors & Aging

Hey, we’re still disinheriting our kids!

Remember? Almost two years ago, we did a series of three segments about how we blunder into disinheriting those whom we long the most to pass our fortunes on to, however affluent or modest, -- our beloveds, children and all our other loved ones. I thought we’d pretty well covered the ways that we inadvertently screw up our estate plans and aspirations.

But, lo and behold, readers and OLLI students -- bless your hearts for ‘fessing up -- you keep on revealing more blunders that lead to broken bequeathing. Many would be worthy of “clever creative scheme status” if only they’d been knowingly, willfully and deliberately contrived. We’re adept at sabotaging our own plans, and of course our loved ones suffer the consequences.

For example, R suffered a sudden mind-numbing stroke, rendering him totally unable to manage his own affairs. His loving children rushed in to take over and to manage his personal business, and they encountered a nightmare of record-keeping chaos to wade through. They might never discover the assets that no records in the mess disclosed. Such cases enrich state abandoned property offices, bulging with financial accounts and property titles escheated to them by providers because no one in cases like R’s knew they existed.

M and her attorney meticulously created an awesome estate plan, and the attorney expertly administered the estate as personal representative and trustee. Even so, years after closing, an overlooked securities account surfaced, but to re-open the estate and process this surprise would have cost more than its value.

Oh, if only R and M, while they were still lucid, had pursued the detective-work of “discovery” diligently, probing every imaginable source of clues to discover and document assets and liabilities — even under the car seat, behind the desk drawer, line items on old checkbook registers, querying associates and the professional team, checking the bank for clandestine safe deposit boxes, and many more! And then -- Oh! if they’d just organized it all into one single-source comprehensive reference, an estate operators’ manual, sometimes appropriately and fondly labeled the “Mayday and Doomsday File”!

We frequently re-visit another frequent and tragic disaster. You, too, might have witnessed this one happen, too:

Perplexed T recently e-mailed me, wondering how it could happen that her dear friend unwillingly had to endure a long, hopeless, expensive final illness that also consumed the precious assets that she longed to bequeathe to her beloved partner and children. To prevent exactly that, Friend, long ago and before moving here, carefully and adamantly had mandated “pulling the plug”, by specifically and aggressively creating her advance medical directive “living will”.

All of her advisers correctly assured her that the directive was valid in South Carolina, because it was valid in the residence state of origin. Despite that, the medical providers here declined to honor it. Beset with their profession’s ethical and legal liability issues, they were reluctant to rely on it because it didn’t contain all of the advance directive provisions that South Carolina’s expansive statutory guidelines proclaim.

The failure? No one had advised T that, for the advance medical directive document “valid” very frequently doesn’t mean “acceptable”. Knowledgeable planners here advise replacing “imported” advance medical directives with the model South Carolina instrument, using South Carolina-resident notary public and witnesses, and then making it even more compelling by recording it at the Recorder of Deeds Office.

E tells us of the phone call that she received from a credit card company a few weeks after her mom died. The caller firmly informed E that she was legally liable for Mom’s unpaid substantial account balance under the state filial responsibility law and would be expensively sued if she did not remit immediately. They even offered to provide “official documentary evidence” of the obligation. Unfortunately, responding to the convincing and clever impositions of guilt, fear, and grief emotions, many families comply. Level-headed E responded appropriately: “Click”.

For claims that aren’t fraudulent, the accepted universal creditor procedure is to bill the estate, not the family, and in writing, providing evidence. A family member isn’t personally liable anyway, even in filial responsibility states, unless co-signed, subject to a state spouse law such as in a community property state, or is an estate fiduciary who willfully acted improperly. Of course, jointly-owned assets and business partners’ personal assets are vulnerable to legitimate creditor claims, which is why our gurus advise us against using those risky forms of ownership.

An interesting trivia-bit: What’s “filial responsibility”? A state law that holds a person’s children responsible for their living expenses, seldom if ever enforced, and swiss-cheesed with exceptions and loopholes. South Carolina doesn’t even have one.

Seen this happen, too? C brought his property will into his second marriage. “Why should I mention V (second wife) in my will? All my stuff should go to my kids and grandkids. She’s got her own money and benefits, and she agrees.” So often this happens in blended family re-partnerships, where “dynasty wealth” is an issue.

Here’s why, C: If V changes her thinking, you will have deprived your progeny of a big chunk of that wealth. V can invoke South Carolina’s Omitted Spouse Option, entitling her to half of your probate estate. At least, if you codicil the will or re-write it, mentioning her, even to say that V gets nothing, she can claim only one-third, under the Elective Shares Option. Alternatively, to stonewall V’s eligibility for both of those options, you might be able to “bulletproof” your dynasty-wealth intentions via joint ownership, a trust, a pre-nuptial agreement with V, gifting, and a bouquet of other tools.

See what you’re missing, C? The time (sacrificing only a couple of rounds of golf) and fee investment (equal to a few payments on the new Lexus) that you could make in engaging a professional estate planner could be miniscule, compared with the loss that you’re setting your dynasty up for.

And we’re far from done! More adventures next time, including world-champion bequest bungler H’s bucket-list of screw-ups.

Contact Gary Newman at garynewman.clu@gmail.com. Your ideas and comments are always welcome.

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