A client recently died as a result of a terminal illness. Prior to meeting with the surviving spouse we reviewed copies of the wills and trusts they had established during the past twelve months. A well respected attorney had drafted the documents to take advantage of the tax benefits of a credit shelter trust. When the first person dies fifty percent of the assets are placed in a trust. The surviving spouse has access to the income from the assets in the trust and can take out principle for health, education, and support. The primary purpose is to avoid paying estate tax on the assets when the second person dies to maximize the amount that will be inherited by the surviving children. Unfortunately, avoiding estate tax and maximizing inheritances was not the goal or desire of the couple in question. The surviving spouse was disturbed when we explained that half of all the assets will have to be placed into the trust. This was going to cause a major change in lifestyle, charitable contributions, and was not the intent of the deceased or surviving spouse.

There are two contributing factors that contributed to this situation.
1. The tax attorney being too focused on avoiding taxes rather than directing assets as the clients wanted.
2. The clients not understanding the documents they signed.
This scenario happens more than it should. Unfortunately, it is also common for the issues not to be discovered until after the first spouse has died. Then it is too late to change.

The underlying cause of the problem is the attorney losing site of the individual’s goals and objectives. By designing the wills and trusts to minimize taxes and maximize inheritances the attorney violated what I believe is the order of priority in doing estate planning.
1. Adequate resources to maintain the lifestyle individuals are accustomed to.
2. Assets are distributed as desired by the individuals.
3. Available tax reduction techniques are used.

There are four simple steps to avoid an estate plan debacle.  
1. Clearly communicate your desires and plans to the attorney.
2. Have any documents drafted reviewed by an experienced planner or other trusted advisor before signing them.
3. Have the advisor explain in plain language what the documents say.
4. If the plans fit with your goals then return to the attorney to sign and implement the documents.

• Fox Guarding the Hen House
• Dementia Is a Cruel Disease
• Mission ICED TEA
• How Much Does Free Cost?
• Objects Are Closer Than They Appear