| July 16, 2021

We all know the story of Cinderella, whose mother died and whose father got remarried. When Cinderella’s dad passed away, Cinderella became a servant in her own home. Do you think this is a fairytale? Unfortunately, stories very similar to Cinderella’s happen every day. Well, except for the handsome prince and pumpkin-coach part. For us, the Cinderella tale is one about terrible financial and estate planning.

Fortunately, we live in a nation of laws and precedents. Mom and dad could have split their assets into separate trusts. Upon mom’s death, her assets could have become part of an irrevocable trust for the benefit of her husband. When dad died, mom’s assets would have passed to Cinderella. Dad, being a decent husband concerned for the well-being of his new wife, could have established a trust for her, even making sure that she enjoyed the use of the home. Upon the stepmother’s death, the remainder of the assets might have reverted to Cinderella. Dad may have felt the need to make outright provisions to his new wife in addition to making sure Cinderella inherited. If the stepmother had not been of the evil variety, she may have wished to make provisions for all of the children instead of just her own, probably with the agreement of Cinderella.

Depending upon the state in which we reside, all types of arrangements are available for us to satisfy our often-overlapping family needs. Clients, who are otherwise loving and decent people, frequently fail to properly care for those they leave behind for no other reason than that they do not know what tools are available to them. Our Cinderella example is only one among myriads of possibilities available to fulfill our moral and ethical obligations to those we have brought into life and to those whom we have promised to cherish “till death do us part.”

Beyond fulfilling our responsibilities to those we love, providing for them can also make good sense economically. No state allows a person to disinherit his or her spouse. All common law states have elective share statutes which grant to the surviving spouse the right to elect an amount specified under state law. Community property states, which we discussed in another post, treat community assets as half-owned by the survivor. Failure to understand the law can lead to expensive litigation, fighting, and hard feelings. Good planning can take advantage of the law to shelter assets from creditors. Proper planning can also preserve assets from estate and inheritance taxes, or from those who have evil intents and prey upon the elderly and disabled.

Rather than being too expensive, comprehensive financial and estate planning helps us avoid costly and harmful errors. We are willing and able to help all of our clients by discussing their concerns with them. A good financial plan can form the basis of an estate plan that can long keep you in the hearts and minds of those who love you. Remember to always use a competent attorney to create your documents and provide legal advice. We are not lawyers and do not practice law. The material provided is for informational purposes only.