The Plan That Failed

Elbert and Florene were good people. Their story probably sounds pretty similar to the experiences of your own family. Elbert retired early from the power company because he saw too many friends die too soon after retirement. He wanted to enjoy at least a few good retirement years. As it turned out, he lived decades in retirement, and for most of those years, he stayed busier than when he worked.

When he wasn’t in the deer woods, Elbert and his brother (who lived next door) maintained a huge garden every year. They probably gave away more produce than they kept. He maintained the softball field at church, where he also worked as a greeter every Sunday morning for as long as he could stand at the door.

He mowed his own yard into his eighties, when health issues put a stop to that. In fact, it was an inability to mow his entire yard in one day that sent him to the doctor for the first time since his Army physical. He went in because he was “tired”; he wound up in emergency bypass surgery. He later declared the whole ordeal a huge waste of time because, even after the surgery, he still couldn’t mow his entire yard in a day.

Florene worked, too, in addition to keeping things running at home. She cut hair out of a beauty shop attached to their house. It was the perfect job for her, considering how social she was. She loved it, and she would have done it forever if arthritis hadn’t prevented her from holding a pair of scissors. Even with the arthritis, she cooked a huge breakfast and a full dinner every single day.

In their later years, Elbert and Florene attended a seminar at church during which an attorney talked about the value of having an estate plan and, in particular, the value of creating a living trust.

I’m sure the attorney correctly described the perils of probate court – the high costs, the long delays, and the extremely public nature of the proceedings. I’m sure he warned them that one of the main purposes of probate is to protect creditors. And I’m sure he correctly described how using a living trust can help avoid probate court and all of those highly undesirable things.

He must have made an impact on them. Despite being very frugal and not particularly educated on legal issues like this, they decided to spend the money to do some estate planning and to set up a trust.

Because Elbert and Florene were my grandparents, I have personal knowledge of how this story ends. It’s not good. Despite spending the time and money to set up a trust, when my grandparents died, their children were still forced to put their estate through probate court.

How could this happen? The attorney they used was correct in warning them of the perils of probate court, and he was correct in teaching them that use of a trust can avoid probate. What went wrong?

My grandparents made a major estate planning mistake, but to be fair, they’re in good company. The mistake my grandparents made is one of the most common problems I see now that I’m an estate planning attorney, and it’s one you hear about in the news because celebrities fall in this hole too.

The problem is not with the creation of the trust. The problem is incorrect or incomplete trust funding. My grandparents, Michael Jackson, and countless other celebrities and middle-class families have spent the time and money to set up trusts only to skip the last step. You have to put your assets in the trust or it can’t keep your estate out of probate court.

The trust funding process is too complicated to presume to outline everything you’d need to know about it in one article, and it’s way too important to just hope you did it right. Get help and be sure!

In my grandparents’ case, at a minimum, they should have changed the deed to their home and adjusted the beneficiaries on their financial accounts.

If you don’t have an estate plan yet, what are you waiting for? January is a great time to knock out important things you’ve been putting off. If you have one but aren’t completely sure you’ve handled every step in the right way, you have some work to do.

Want to learn more? You’ll find the rest the story of Elbert and Florene (and there’s a lot more to tell), along with the nuts and bolts of how best to prepare for death, taxes, and long-term care, in my book, You Need a Plan.