The Family Estate & Legacy Program

About Sheppard Law

This author has not yet filled in any details.
So far Sheppard Law has created 9 blog entries.

Limits of Technology

The other morning, at 2:30 AM local time, I watched my cousin’s son’s Bar Mitzvah at the Western Wall in Jerusalem via a live Facebook stream. An extremely moving service, he chanted from the Torah in front of the holiest site to the Jewish people. The rabbi set up a small table on which he placed the Torah scrolls, covered by a tallit (prayer shawl) until it was time to read the day’s parsha (weekly reading of the Torah portion).

In the background I could hear other Bar Mitzvah ceremonies going on concurrently. I figured that it would be difficult to concentrate enough to chant a Torah portion with the cacophony that surrounded the young man, but he did an exemplary job.

Technology is amazing isn’t it? A few years ago the only way that I could have “been there” would be to hope for a national news service’s live satellite feed. Today, with nothing more than a Smartphone and a wifi connection, I enjoyed sharing the family’s celebration.

But technology sometimes embeds a false sense of security.

Since this is an estate-planning column, I’ll focus here on instances I’ve seen when a self-made estate plan went bad. Legalzoom, Rocketlawyer and other services provide inexpensive and convenient means to create wills, durable powers of attorney, health care surrogates and even trusts. These web-based document preparation services lead the user through a series of questions similar to the online tax preparation programs, resulting in the estate plan.

While self-prepared, web-based documents might be fine and appropriate for someone with a very modest estate and a very straightforward financial and family situation, for others it can lead to unintended and even adverse consequences. You may be familiar with a computer programmer’s common lament “Garbage In – Garbage Out”, meaning that if you don’t know the consequences of the answers to the program’s prompts, you won’t get a proper result.

Florida law is rife with peculiar specifics. Take, for example, the law surrounding the devise of your homestead. If you are survived by a spouse or a minor child Florida law declares a bequest of your homestead to a testamentary (after-death) trust as invalid. This is true even if that testamentary trust benefits the surviving spouse. I see this commonly with trusts that are not only web-based, but those that were prepared by an attorney in a northern state but have not been updated.

Recently I read a self-prepared, web-based will that directed for a $2,000/month distribution to a surviving spouse for the rest of her life. The problem was that the document did not carve out amounts from which to generate the income, nor did it provide for the correct administrative provisions necessary to carry out the decedent’s intent. Without the “carve out” it was impossible to determine how much to distribute to the other beneficiaries. That estate plan ended up in court, with the beneficiaries fighting it out over what the decedent would have wanted.

You can bet the farm that the attorney’s fees spent on fighting out the ambiguity far exceeded what it would have cost to have a qualified estate planning attorney prepare the plan.

In yet another web-prepared plan I noticed that the decedent named five individuals to all serve concurrently as the personal representative (executor) under the will as well as the trustee of the trust. The document did not indicate whether a unanimous consent to conduct trust business was necessary or whether a simple majority ruled.

The banks and financial service firms where the accounts were located were rightly afraid for their own liability. What happened if one of the trustees directed for a distribution, but another objected? What happened next was inevitable. The banks and financial services firms sent the matter up to their in-house legal department, resulting in frozen accounts for several months. The family had to pay out of pocket not only for legal fees to rectify the situation, but to pay bills until the accounts became available for use again.

The new tax act recently signed into law by President Trump pushes the federal estate tax threshold to amounts where only the wealthiest will have to plan to minimize or avoid the tax. It’s likely that with the threshold so high, many will be lured into creating inexpensive web-based plans.

But there are many other traps found in this law for the unwary when planning one’s estate. Income taxes will continue to be an issue in almost everyone’s estate. Everything from taking advantage of the increase in the step-up in tax cost basis at one’s passing to qualified retirement account (IRA, 401(k)) issues to protect the inheritance, defer the income tax as long as possible and achieve tax deferred growth will remain huge issues to anyone with any degree of net worth.

I’ll be exploring those issues in greater detail, including the effects of the new tax act, in upcoming columns.

Stay tuned!

Myths About Estrangement

From time to time a client will not tell me about a child because they have become estranged, and they don’t want to leave anything to that child or to that child’s children in the estate plan. When I don’t know that the child even exists, problems can arise since it is usually proper form to mention the child and specifically disinherit him or her in the will and/or trust. Otherwise, the child might successfully claim a portion of the estate.

I suppose that some clients who fail to discuss the relationship do so because of feelings of guilt or shame. They might feel that they’ll be judged if someone knows about the estrangement. Other times it might be out of pain. The client doesn’t want to even think about the issue, so they would rather pretend that the relative doesn’t exist.

A recent New York Times article sheds some light on the subject. Broadly speaking, estrangement is defined as one or more relatives intentionally choosing to end contact because of an ongoing negative relationship. The article points out those relatives who go long stretches without a phone call because of external consequences like a military deployment or incarceration don’t fall into this category.

Lucy Blake, a lecturer at Edge Hill University in England published a systematic review of 51 articles about estrangement in the Journal of Family Theory & Review. This body of literature, Blake wrote, gives family scholars an opportunity to “understand family relationships as they are, rather than how they could or should be.”

As more people share their experiences publicly, some misconceptions are overturned. Assuming that every relationship between a parent and child will last a lifetime is as simplistic as assuming every couple will never split up.

Myth: Estrangement Happens Suddenly

It’s usually a long, drawn-out process as opposed to a single blowout. A parent and child’s relationship typically erodes over time, not overnight. It is usually an accumulation of hurts, betrayals and other factors that accumulate, undermining the sense of trust between family members.

Failure to visit a parent and then not doing so once that parent becomes sick and hospitalized, for example, can be the proverbial straw that breaks the camel’s back. A parent who cuts off a child financially while he is in college despite having resources can be another triggering event after a lifetime of perceived indifference.

Kristina Scharp, as assistant professor of communications studies at Utah State University states that estrangement is “a continual process. In our culture, there’s a ton of guilt around not forgiving your family. So achieving distance is hard, but maintaining distance is harder.”

Myth: Estrangement is Rare

In 2014, a United Kingdom study found that 8 percent of roughly 2,000 adults said they had cut off a family member. This translates to more than five million people. An additional 19% reported that another relative was no longer in contact with family.

In a 2015 Australian study of 25 parents cut off by at least one child found three main categories of estrangement. In some cases, the son or daughter chose between the parent and someone or something else, such as a spouse or partner. In others, the adult child punished the parent for “perceived wrongdoing” or a difference in values. Additional ongoing stressors like domestic violence, divorce and failing health were also cited.

In-laws who keep the grandchildren away were common issues, as were perceived slights over child-raising, house cleaning/maintenance and even cooking. These slights can escalate into feelings of cumulative disrespect between the parties.

Myth: Estrangement Happens on a Whim

In another Australian study, 26 adults reported being estranged from parents for three main reasons: abuse (physical, emotional or even sexual), betrayal (over secrets), and poor parenting (being overly critical, shaming or scapegoating). The three were not always mutually exclusive and commonly overlapped.

Most of the participants noted that their estrangements followed childhoods in which they had already had poor communications with parents who were physically or emotionally unavailable. One participant said that because he was always responsible for two younger siblings, he decided never to have children of his own. After years of growing apart, the final straw was his wedding day.

In 2014, he and his longtime girlfriend decided to marry at City Hall for practical reasons. He didn’t’ invite his family, in part because it was an informal gathering. But also because a brother had recently married in a traditional ceremony, during which is father backed out of giving a speech. He worried that his father might do something similarly disruptive, so he did not invite him or the rest of the family.

The family found out about the marriage on Facebook. One brother told him he was hurt that he wasn’t even told, and the sister messaged that she and the father would no longer speak to him.

These are all sad tales. It’s interesting that family estrangement is so common. But when planning your estate, it’s usually important for your estate planning attorney to be aware of these issues and to, as delicately as possible, include necessary language in the legal documents.

Module 7: Maintenance Program

Tags: , , , , , , , , , , , |

Your estate plan includes one free year in our Maintenance Program, which is a cost effective way to ensure that your documents do not fall out of date with the ever changing legal, tax and financial world. The Maintenance Program also works to keep your plan up to date with your family and financial situation. When you open a new account or acquire a new asset, our team will work with you to make sure that it’s titled correctly.

Module 6: Funding Process

Tags: , , , , , , , , , , , , , , |

Unlike other firms who hand you a sheet of instructions how to transfer (or “fund”) your assets into your revocable trust, we do it for you. This is another way that our unique process provides you confidence, comfort and clarity. You’ll rest assured knowing that your legal team includes well-trained professionals who work with your financial firms, banks and advisors to ensure that everything is titled correctly.

Module 5: Advisor Coordinator

Tags: , , , , , , , , , , , , , , , |

You may have a trusted attorney, CPA, or financial advisor that you would like involved in this process. We’re happy to do so. Just let us know and we will either invite them to your meetings, or conference call them in if they are not local.

Module 4: Document Builder

Tags: , , , , , , , , , , , , , , , , |

We will build your documents based upon the Design phase specifications, providing you easy to read and understand flowcharts and summaries. You will have as much time as you need to ask questions and consider revisions to the first draft. It is important to know that we want to answer any and all questions that you may have about this process.

Module 3: Design

Tags: , , , , , , , , , , , , , , , |

We will work together to design a will or trust package that meets your needs, given your family and financial situation, and your goals and concerns. There is no such thing as a “one-size-fits-all” estate plan. The Design element will consider the types of assets that you own, how you own them, and the relative tax consequences of your holdings, among other things, in fashioning your individualized plan. We will provide you a fixed fee quote so that you know the price for us to complete your planning.

Module 2: Goals & Responsibility Conversation

Tags: , , , , , , , , , , , , , , , , , |

As we begin our initial conference, we will ask you what goals are most important to you and what concerns or obstacles may currently stand in the way of achieving those goals. This will form the basis of your estate planning strategies, and provide us valuable insight into your mindset. We will also review who should make decisions for you if you could no longer do so for yourself, which is an often neglected but vital element to your estate plan. Finally, we’ll discuss who might be the best party to handle all of the responsibilities necessary to carry out your final wishes and directions.

Module 1: Organizer

Tags: , , , , , , , , , , , , , , , , , , |

It all starts with your Client Organizer that you complete and which gives us a starting point to analyze your current situation. It also provides us the facts that we need to ask you the right questions pertinent to you. The Client Organizer should be completed as thoroughly as possible. The information that you provide is confidential, and is important for us to provide the best legal advice during our initial conference.