There is lots of information out there about how to protect your inheritance after have received it. I am going to address five easy steps to take to make sure you aren't disinherited before your parent or parents die. Most of my discussion in this article is focused on protecting your expected inheritance from a parent. However, it applies equally to an expected inheritance from any number of other people - grandparents, aunts, uncles, close friends, and so on.
- Don't be a stranger. This may seem obvious to some people. However, but you would be amazed at how many times adult children are shocked to find out that their parent changed his or her Will or Trust to name someone other than the children to receive the parent's estate when the parent dies.
Real Life Example: I get a call from the nieces and nephews of Aunt Beatrice. Aunt Bea died recently. She was a widow, and she had no children. Aunt Bea's relatives are shocked that she had prepared a Will several years ago naming Aunt Bea's neighbor as the sole recipient of Aunt Bea's entire estate. The relatives ask what they can do. Surely the neighbor must have engaged in undue influence or violated the Arizona vulnerable adult statute. The neighbor quickly sells the house and moves out of state.
It turned out that the nieces and nephews only called Aunt Bea every couple of months. They only saw her once a year, if that.
In this situation, it turned out that Aunt Bea probably struck a deal with the neighbor that if the neighbor helped take care of her in her old age, she would give the neighbor her house and other assets. Aunt Bea probably felt alone and didn't know where else to turn.
Worse yet, if the relatives wanted to start a legal proceeding against the neighbor (for undue influence or any number of other claims), they would be fighting an uphill battle. The neighbor now has lots of money to use for legal fees. The relatives, on the other hand, are stuck self-funding the litigation (unless they are able to find an attorney willing to take their case on a contingent fee basis).
The example above happens regularly. The perpetrator may be a cleaning lady, a realtor, a personal assistant, or anybody else. Sometimes the unrelated person is noble and honest and genuinely helped the older person in his or her final years. Unfortunately, however, many times the person named in the Will or Trust is a criminal who obtained the older person's trust and then steals the older person's assets when that person is most vulnerable.
If your close loved one is older and needs help, then you should be the one helping ensure that person is cared for. You should be the one making sure that your older parent has a way of getting groceries and other necessities. Don't force your dad to rely on strangers to take him shopping and to the casino.
- Document your parent's testamentary wishes. Whatever your parents' wishes are, make sure they are documented. Imagine two different scenarios.
In the first example, your dad tells you that he wants his assets to be available for his second wife during her lifetime, and then the remainder to be distributed equally among his children. You think this is a great idea. However, you do nothing further. When your father dies, you find out that he recently amended his Trust so that everything goes to his second wife and her family. You schedule a consultation with an attorney, and that person says that there is nothing you can do. Your father had every right to give his assets to whomever he felt like. Some people call this the "Golden Rule" - he who has the gold makes the rules.
Now imagine things slightly differently with this second example. This time when your dad tells you what he wants to do with his estate, you ask him more questions. Does your father have a Will or a Trust? Will he let you copy it? Who has copies? Who is his attorney? What is the attorney's name and address? You then get some witnesses to hear your father - preferably disinterested people like neighbors or family friends. Perhaps you ask your father to tape record his statements. Or you ask your dad to write down (and sign and date) his thoughts about what he wants to happen with his assets when he dies. Even better yet, get multiple statements over a period of time by repeating these steps once every year or two. Then, if your father dies with a Will or Trust that is significantly different from what he has been saying year after year, you have a much stronger case to say that he did not know what he was signing when he signed the most recent Will or Trust, or that perhaps he was unduly influenced to disinherit his children.
Going a step further with the second example above, imagine that your father's 1989 Will says that he wants to treat all of his children equally. His 1995, 2000 and 2005 Wills all say the same thing. Then, his 2009 Will gives everything to one child, or to a second wife. This is good evidence of undue influence.
The Arizona Trust Code contemplates the type of documentation described above. These supplemental trust documents are sometimes called "Statements of Wishes." They are often incorporated into the trust document itself, but they can be separate as well.
- Deal with family photos and heirlooms now. I am saddened by how often family photographs are taken or thrown away by one impulsive adult child before the other relatives have an opportunity to get copies. The best way to deal with this is beforehand. If your parents have photographs, get copies made. Make copies of family movies.
If your parent wants a grandchild to have an heirloom (like a wedding ring or piece of antique furniture), the best solution is simply to give the item now. Of course, your parents probably still want the joy of keeping the object during their lifetimes. In that event, make sure that their Will or Trust allows for distributing personal property by a written list. (This can be tricky, however, so talk to an attorney about how to do this.) The written list can then be incorporated by operation of law into the Will or Trust, and that list can give the wedding ring to the granddaughter. Some people put stickers underneath objects - saying that a picture goes to son Billy, and the crystal goes to daughter Suzie. However, this is not legally enforceable, and there is no guarantee that these wishes (even though they seem to be clearly expressed) will be carried out.
In the end, the best thing is to talk to a probate and estate planning lawyer about what to do.
- Convince your mom and/or dad to talk to a good estate planning attorney. Many older people are reluctant to spend money on lawyers. They would just as soon write up their own document and save the money. The problem is that these homemade Wills often don't do what mom or dad intended.
Real Life Example: Dad writes a homemade Will that says:
"I give, devise, and bequeath all of rest and residue of my estate, whether real, personal, or mixed, of whatsoever character and wheresoever situated of which I shall die seized or possessed, or of which I shall be entitled to dispose by Will at the time of my death, to my three children, Adam, Brook and Christian, share and share alike."
When dad dies, it turns out that Christian was named as the "pay on death" beneficiary of all of dad's retirement accounts, bank accounts and other investments. In other words, even though the Will said that everything should be split equally, Christian actually received almost everything himself.
The other two children are in a difficult situation. In order to bring the other assets back into the estate, they need to show that the bank did not follow its procedures in placing POD designations on the assets. Or they can try to show that Christian somehow pressured dad to make him the beneficiary of the accounts. The problem is that the star witness (dad) is now not available as a witness.
In all likelihood, Christian will successfully take the bulk of dad's estate, and the other two children are simply out of luck.
The moral of the above story is to convince your parent to use a good attorney. And it is best to have restate the estate plan at least every five years.
- Talk to your parents about what there is, and find out how it is titled. Having the best estate plan with Wills and Trusts, does no good if the house is titled in joint tenancy with the second wife, and all of the bank accounts and investments are designated as payable on death to the second wife.
Also, if your dad told you every year for the last 10 years that he has about $1.5 million in assets, and then he dies and he only has $50,000 in a bank account, you know that something happened. Don't be shy. Talk to your parents. If they are shy about talking about money (like many older people are), then explain that you are trying to get information so that you can protect them from scoundrels who prey on older people. Say that you do not want to seem like a vulture, but you are asking because you care. And you don't want your parent to be scammed by someone when they need the money the most.
Brian Starr is the founding partner at the Phoenix law firm Starr Law Firm, PLC You may contact Brian at 866-920-0549.
Disclaimer: The information contained in this article is made available for general informational purposes only, and is not intended to constitute specific legal advice or to be a substitute for advice from qualified counsel. For that reason, you should not act or refrain from acting based on any information in this article without first obtaining advice from professional counsel qualified in the applicable subject matter and jurisdictions.