At the end of each year, I like to reflect on readers’ questions and on my day-to-day experiences and consider some of the “easy fixes” that we can do in our own families and our own estate planning to make sure that what happens when we are gone is, in fact, what we hoped would happen. It is simply impossible to anticipate all the possible outcomes of our “planning,” but hopefully you may find some of the following comments helpful.
We had a client who was, unfortunately, the victim of identity theft. Several of his bank accounts were compromised so his banker helped him close the accounts and open new ones. This client had always been both legally and financially sophisticated but, when this event occurred, he was dealing with a serious medical issue which ultimately led to his death. When we stepped in as trustee after he passed, it was a shock to find that when the new accounts were opened, they were put in his name and not the name of his trust. While we will hopefully avoid a probate, we are going to court to explain to the judge what happened and see if the court will order that my client meant to put them in the trust but, due to his compromised state, neglected to do so. If the judge does not agree, we will have a probate. Exactly what this client had hoped to avoid.
While this may seem obvious, make sure your trustee or executor knows where to find the originals of your estate planning documents. A client “Fred” passed away this year. Fred had worked with several attorneys over the years to prepare an estate plan but, at the time of his death, his plans had not been finalized. Fred had three houses he occupied and, as it turns out, Fred was somewhat of a hoarder. Since no plans could be found, I was appointed by the court as an administrator of his estate because it was determined he died “intestate.” Intestate means you did not have an estate plan and your assets will go to family according to the probate code. That is, first to a spouse, then to children. If neither of these exist, the estate goes to parents. Because Fred did not have any of these, his estate is going to cousins – some of whom never knew Fred.
In clearing out Fred’s homes, we found a copy of a will that Fred had prepared giving his sizeable estate to several friends. Because it was a copy and no original could be found, the court would not accept the will as valid. Fred’s cousins will be happy but, as a professional fiduciary, it makes me sad to think his wishes will not be fulfilled regarding the distribution of his assets.
Ralph and Jean had two children. One was honest and financially savvy, so they appointed her as trustee. The other daughter had a medical background, and they appointed her as their agent under their Health Care Directives. Perfect, right? Each of the daughters possessed the skills needed to address their respective roles. Ralph became mentally incapacitated and a few years later, Jean died. The two daughters stepped into their roles to care for their father but, shortly thereafter, began to disagree about finances and health care for Ralph. Technically, the trustee handles the money and the health agent makes medical care and housing decisions, but they need to work closely together on behalf of their father. At one point, the two were not even speaking to each other. The plan Ralph and Jean set up was perfect, but it simply would not work if these two important roles could not be fulfilled. Fortunately, Ralph and Jean put in a guard rail. Their trust appointed a “Trust Protector” to step in and make sure the plan was working and, if it did not work, make needed changes to make sure Ralph was getting the care and support he needed. After several sessions with the Protector, the daughters were able to set aside their personal feelings and put their father’s needs first. Sometimes allowing a third-party professional to help the parties amicably deal with each other and bring their personal strengths to the table can be the saving factor.
Happy planning in 2026!
Liza Horvath has over 30 years of experience in the estate planning and trust fields and is the president of Monterey Trust Management, a financial and trust Management Company. This is not intended to be legal or tax advice. If you have a question call (831) 646-5262 or email liza@montereytrust.com
