Where you want your money to go is one concern. Where you don’t want it to go is just as important.
ANNIE: Ever since Daddy died, it’s been a nightmare.
SARAH: My husband, Harry, fought with Peter, our son, for years, and always said he wouldn’t get another dime. We had to give him money so many times; over the years, that’s tens of thousands of dollars. The worst thing was when Harry died, Peter didn’t even come to his funeral, couldn’t be bothered. I will never forgive him for that. I decided then that was that. I won’t let him have another dime, just like Harry said. Last year I moved here from Florida to live near Annie, my daughter, and my grandson, William. I trust Annie, she never wanted a thing. Peter is living in our house in Florida and wants it put in his name. No way. He can live there, but nothing more. Not one penny.
ANNIE: Mama kept all the money in a brokerage account in Florida. Daddy liked the person who handled it, so she thought, Why not just leave it there? What did we know? Daddy always took care of everything, so when we would get these statements from Florida, we just filed them away. Mama hardly goes out on her own anymore because she’s afraid she’ll trip and fall. But she loves to cook. Most nights William and I go over, and she makes us a great dinner. One night when we got there she was waving this power of attorney form around that Peter had sent her, and she was having a fit.
SARAH: I’m getting older, yes, but not senile, as you can see. Peter is trying everything to get his hands on my money. Can you imagine? He sends this note that says, “Mama, just sign here.” Power of attorney. If anyone is going to take over for me, I want it to be Annie. I trust her with my life. I just want him to leave me alone. And when I die, I want the money, what’s left of it, to go to Annie and William. Not a penny to that son of mine who wouldn’t even come to his own father’s funeral.
This story is dramatic—and it gets worse. But I’ve seen many cases like this. Money can tear apart families, even families that were closer than this one to begin with, faster than anything else.
I met Annie and Sarah when they were referred by another client who thought they needed some financial help, and I was dceply relieved that they came when they did. Time was of the essence. I opened all the Florida statements that they had filed away, and they were stunned to find out that Sarah’s assets added up to more than $3 million. They had no idea. I noticed something else: many, many trades of stocks and bonds had been going on in her account. How could Sarah have known this, when she didn’t even open the statements or mail that came from the brokerage house? A few calls to the broker later and we found out that it was Peter who was trading the account. The broker figured it was okay because Peter was Sarah’s son. This was no excuse and his actions could have cost• that broker his job, but Sarah felt that Harry had liked him and that was good enough. Even so, we convinced her to transfer the entire account to a reputable broker here in California, where she lived. She also worked with an estate and trust lawyer, Janet, an associate of mine I have come to trust by watching how she has worked with other clients in the past, to make decisions about how to best protect her estate.
We put together her revocable living trust and began transferring her assets into it. The assets would remain in her name throughout the rest of her life, then would pass directly to Annie. Because of Sarah’s age and frail health, we also gave Annie durable power of attorney for health care, which is covered later in this chapter. Because the estate was large, and because we all felt that Peter would do whatever he could to claim whatever he could, we took an additional precautionary step. We videotaped Sarah talking about the trust, expressing what she wanted to have happen to her estate when she was gone. As we went through the process, Sarah decided in the end that she wanted to leave Peter $10,000. Although frail, Sarah knew exactly what she wanted and what she was doing, and the video reflected that.
Everything went fine for about four years, but as Sarah’s health continued to weaken, she decided she wanted Annie to step in as the new trustee of the trust. This meant that Annie would be the one who could decide what was to happen with the money in the accounts, write checks against them, and generally oversee everything. They came back to my office, and it was an easy process to change the name of the trustee from Sarah to Annie. Janet then informed in writing all the institutions that held Sarah’s money that Annie was the new trustee.
About two weeks later Peter called to say that he was coming to visit Sarah; this was a first, and it made Annie very nervous. Still, she agreed to join her brother at her mother’s house for dinner the night he was due to arrive. When she got to Sarah’s condo, however, the locks had been changed. After meeting with the super and calling a locksmith, Annie gained entry and found her mother gone, her suitcase gone, her checkbook gone—and the pills she needed to take every day still on the night table. Five days later the authorities found her in a hospital in Florida. She had collapsed from dehydration and starvation.
Annie and William, in a panic, flew to Florida to bring Sarah home, and her story emerged slowly. Peter had taken his mother to the bank and tried to close out her account—but wasn’t able to, since Annie was now the trustee of her mother’s trust. He was able, however, to clean out her safety-deposit box of quite a lot of cash that Sarah liked to keep there just in case. Then he flew her to Florida, made her sign another power of attorney form he’d drawn up. That was all Sarah would say about the last time she saw her son. As Annie and William were bringing her home, Sarah died.
After Sarah’s death Peter was notified about the trust and how much he was to get. He was furious. He claimed that his mother had promised to transfer the deed to the house over to him while she was in Florida. He claimed a lot of other things as well. He threatened to sue. But we sent his attorney a copy of the trust and a copy of the video, and that was that. Even though Peter was actually living in the house, the trust made Sarah’s wishes crystal clear. Her trust overrode Peter’s claims and threats. The trust protected what Sarah wanted to have happen to her money. Had Sarah had a will, not a trust, the probate fee on $3 million would have been $82,000.
One footnote to this story: Because there was a lot of money at stake here, and because Sarah and Annie were afraid that others might find out how much money they had, their privacy was a big concern to both of them. So there was yet another reason why they were better off with the money in a trust rather than in a will. Wills are public documents, and after someone has died and his or her will has been probated, anyone can go down to the courthouse and look up the information within it. With trusts, only the people you want to se them can see them.