You can give away your stuff, but you can’t give away your children

Dear Len & Rosie,

We’re a young couple that just had a daughter three months ago. We have outdated wills, and we’ve been looking at trusts and wills since before our daughter was born. If we don’t have a trust or will and we suddenly passed away, what will happen to our daughter? We want to ask my cousin and her husband to take her if anything were to happen to us. Do we need a will or trust in order to make that legal? What if my mother-in-law suddenly want custody of our daughter? Will that be a legal battle and a judge will decide? Will a will stating that we want my cousin and her husband to take our daughter be enough or do we need a trust in order to avoid problems like that?

Connie

Dear Connie,

You can give away your stuff, but you can’t give away your children. It’s important for you and your husband to make new wills to provide for your new daughter. But it’s just as important to understand that while you can make almost any provision for how your home and life savings are dealt with after you die, you can only suggest guardians to raise your daughter in your stead. Guardians are nominated by parents, just as actors are nominated for the Oscars. A parent’s nominee doesn’t always win, because guardians are appointed by judges, not the parents.

Why is this so? Parents sometimes make mistakes, or time may pass after a will is made and the trusted friend you picked as guardian could turn out to be a bad person. No judge in California is going to appoint a death row inmate as your child’s guardian, no matter what you want. In guardianship proceedings, the judge will take your wishes into account but must ultimately pick the guardian based on what he or she perceives to be best interests of the minor child. Fortunately, it usually takes a pretty good reason to convince a judge to ignore your stated wishes. But you have to state your wishes. That’s why you and your husband need to make wills setting forth your choice of guardians. And if there’s someone in particular you don’t want as guardian, such as your mother-in-law, your wills should say that as well.

Your estate plan should also be designed to protect your daughter from herself. The last thing you should want is for your bright and beautiful daughter to get her inheritance in one lump sum on her 18th Birthday. She’ll be broke by the time she’s 20. It would be worse if you have a son - he’ll spend it all on a car and not bother buying auto insurance. We have seen this happen.

Whether it’s just wills, or wills and a revocable trust, your estate plan should include a sprinkling trust for your daughter. A trustee that you pick will be in charge of your daughter’s inheritance, spending money on her for whatever she needs until she’s old enough to be trusted with the money. Most parents pick age 25, because by that age their child is out of college and is learning how hard it is to save money. And best of all, even if your mother-in-law Cruella somehow gets appointed as guardian, she won’t be in charge of your daughter’s inheritance.

You and your husband should update your estate plan, but if all you want is a quick guardianship nomination, you can download the California Statutory Will form, for free, on the State Bar’s web page, www.calbar.ca.gov.  Click on the link to the left labeled “Public Services.”

Len & Rosie

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