He Did It Himself…And It Didn’t End Well
By Craig Watson, Texoma LIVING WELL Magazine
Jack, a widower, passed away last year at the age of 92. He left an estate valued at $400,000. He was a veteran and relied on a Will that was provided to him free of charge by the military. The Will was consistent with his goals when it was signed in 1978. Since his wife did not survive him, his Will bequeathed his estate to his children in equal shares, per stirpes. Jack had three children but two of them passed away before he did. His two deceased sons were survived by several children, who, of course, are Jack’s grandchildren. Jack was not especially close to any of his grandchildren. Jack’s surviving daughter faithfully cared for him in his later years as he slipped further into dementia.
The term “per stirpes” is a Latin term commonly used in wills. It means “by right of representation.” Applying it to Jack’s case means that the children of each of his deceased sons will inherit the share their deceased parent would have inherited. So Jack’s estate will be divided into three equal shares: one share to his surviving daughter and a share for each of his deceased sons that will be split equally by their respective children.
Jack’s desires changed over time as his sons passed away, his relationship with his grandchildren became more distant and he gained more appreciation for the time and dedication his daughter invested in his care. Jack decided that he wanted to remember his grandchildren by making annual gifts of $10,000 to each of them for the last couple of years. In this way, he gave a total of almost $200,000 to his grandchildren in the last couple of years before he died. He did not make equal gifts to his daughter because he wanted his entire remaining estate to pass to her after his death since she cared so faithfully for him and his wife for so many years. He thought that since his sons had already died, the bequests he made to them in his Will would be extinguished and that all of his estate would pass to his daughter.
Jack should have consulted with an elder law attorney to review his goals and his estate plan to make sure his wishes would be carried out. However, Jack thought he could save a little bit of money on legal fees. The result was very unfortunate because he made a mess of his plans which hurt his daughter’s feelings. The net result of Jack’s Will is that the children of Jack’s deceased sons will inherit two thirds of his estate plus they get to keep the annual gifts of $20,000 that each of them had already received. His daughter will only inherit her one third of Jack’s estate that had been diminished by the hundreds of thousands of annual gifts that he already made to his grandchildren. Jack’s Will should have left his estate to his three children, per capita and then it would have accurately fulfilled his goals because the gifts to his sons would have expired when they died and all of his estate would have been inherited by his surviving daughter, which was what he wanted. The effect of two little words wrecked his entire estate plan.
There are several “morals” to this story, which is a true story with different names. First, when changes occur in your family, have your estate plan reviewed by an attorney who specializes in Wills and estates to make sure your goals will be correctly accomplished. Second, if your estate planning documents are over 5-10 years old, it would be a good idea to have them reviewed. The law is a mish mash of state and federal court cases and legislative regulations that seem to change constantly. Almost every new statute that is passed always seems to have some surprising unintended consequences. Finally, Jack and his wife worked hard to save and accumulate their large estate. He had saved more than enough money to pay the relatively inexpensive legal fees to make sure his goals were correctly and completely carried out by his estate planning documents. This tragedy was easily avoidable so don’t let it happen to your family.
Craig Watson’s law practice focuses on Estate Planning, Probate, Guardianship and Elder Law. Formerly a CPA, he has almost 25 years of experience. Call 903-813-8500 or go to www.craigwatsonlaw.com