Estate Planning Conflicts of Interest

Dear Len & Rosie,

My husband and I have wills, but he wants to get a trust, to save probate fees, he says. We have had our wills for over 30 years and my daughter is listed as our executor. My husband has a son and a daughter, by two different wives. His son has never worked for a living. He isn’t disabled. My husband and I have been married for 36 years and have pretty much supported his son our entire marriage. Despite this, my husband wants to make him our trustee.

I want to protect my daughter and grandchildren as my husband’s son is not close to them. My husband has a sizable amount of stock in his own name, and he and his son share a $50,000 account inherited from one of their relatives. I’m worried that won’t be enough to my husband’s son. How can I make sure my daughter will receive her share of what I have accumulated if his son is put in charge of a trust? Should we even get a trust?

Dorothy

Dear Dorothy,

Whenever spouses talk to us about estate planning, we talk to them about potential conflicts of interest, because there may be things about which they will disagree. When clients have children from previous relationships, the conflict is often real, not just potential, so it’s important to us, as lawyers, not to get caught in the middle.

Lucky for you, your husband did not sign your letter. That means we get to take your side. We are providing you and you alone with advice and we don’t have to be concerned with your husband’s interests. So, our considered legal advice is that the last thing that you want to do is to make a trust that will put your ne’er-do-well step-son in charge of all of your property when you die. The primary qualifications to be trustee is that the person has to be both honest, diplomatic, and smart enough to seek professional help when it’s needed. You do not trust your step-son. That means he’s unqualified to be your trustee. It’s that simple.

If you die with a will and step-son was your executor, it might turn out alright, because your estate would go through probate in court. The court would look over your step-son’s shoulder to make sure he is doing the job right. But trusts do not go through probate. Your step-son could simply take all of your property and give it to himself.

If that were to happen, your daughter could sue him, and she would probably win. However, the attorney’s fees she would have to pay, the time she would lose, and the emotional stress of a court battle would cost far more than probate.

You need a trustee you can trust, or you need a will. You also need to consider putting some of your assets in pay-on-death accounts for your daughter. You should consult with an estate planning attorney by yourself, without your husband, to discuss how your daughter can get her fair share without having to fight for it in court.

Len & Rosie