Hey there, Legal Tea Listeners –This is your host, Jenny Rozelle! Today’s episode of Legal Tea is the “cautionary tales” topic. And on these “cautionary tales” episodes of Legal Tea, we normally talk about real-life cases with real-life clients that are things me or my office have worked on -or they are things that I think are generally good things to be aware of, so you don’t turn into a cautionary tale on my Legal Tea podcast one day! Well, this episode is both – I’ve got some real-stories for you, but they’re also really, really good to know – especially if the topic has meaning to you. Today is about “blended families” and what I mean by that, is that the family is not entirely all blood and/or adopted. Maybe we have some stepparents involved … or stepkids or stepgrandkids. Often, when we have step-anything, those families are referred to as “blended families.”
In my experience, blended families are very normal – so long are the days where everyone stayed married forever and/or stayed with the other biological parent of their child or children. That’s just not the norm anymore. So, “blended families” are nothing to be ashamed or embarrassed about. For the episode today, though, what I want to say is that estate planning for blended families can be unique and even sometimes, a bit tricky. If you’re a faithful Legal Tea Listener, last week’s episode was on Tom Clancy – and you may remember he had children from a first marriage and a child from a second marriage. His estate, after he died, got chaotic, for sure, and partially, that’s because his plan was trying to accommodate his blended family. So, this episode is a great follow-up to that episode!
Today, I am going to share a couple of real-life stories which involved blended families and we’ll wrap things up with some “things to learn and remember” at the end of the episode. … Alrighty, first story … we’re going to talk about the Smiths (which of course was not their last name) – oh, the Smiths…where to even start with them? We initially met with MRS. Smith only – and she shared that MR. Smith’s health had declined and she was interested in learning how she could get their assets protected. A fairly-extensive, but solid game plan was put together – and it involved utilizing an Asset Protection Trust and getting Mr. Smith on Medicaid.
Because of Mr. Smith’s existing documents, it forced Mrs. Smith to have to work with Mr. Smith’s child – keep in mind, this was Mr. Smith’s child, not hers. They each had their own respective children – but none together. It was discovered through the process that there was a fair amount of distrust between Mrs. Smith and Mr. Smith’s child – which made the process more difficult. You see, prior to utilizing our law firm, Mr. and Mrs. Smith had each created a Revocable Living Trust – meaning it was not a single, joint Trust. Though, because 1) Revocable Living Trusts offer no asset protection against Medicaid and 2) Medicaid does not care if you and your spouse hold things individually and not jointly, we had to combine their assets as part of the “game plan.”
Mr. Smith’s child was squeamish about this idea – he didn’t want to join things with his mother-in-law, Mrs. Smith. But to get Mr. Smith on Medicaid, we had to. You could feel the distrust between the two – and at times, I’m just Justin felt like a mediator rather than an estate/elder law attorney. Actually, I know he did. So, for that reason, he had Mrs. Smith and Mr. Smith’s child execute a Promissory Note that basically said, “Hey, when we are through the Medicaid process and on the other side, Mrs. Smith has to ‘pay Mr. Smith’s part back’ to bring it back even.” Both signed – thank goodness.
Sometimes, things go awry – and they do so out of our control. Mr. Smith ended up passing up shortly after Medicaid was filed for (and subsequently approved). At this point, Mrs. Smith needs to get Mr. Smith’s share back to Mr. Smith’s child. We knew she would – she wasn’t evil, but she definitely started nickel and dime’ing to be able to “keep” some of Mr. Smith’s money. Like, she said that she purchased a chair for Mr. Smith, so she should get reimbursed for that… Yeah….
After SO many conversations between Mrs. Smith and Mr. Smith’s child, Mrs. Smith finally (after many reminders) paid Mr. Smith’s child back. All ended up fine and dandy. I was not directly working on this case and never dealt with Mrs. Smith, Mr. Smith’s child, no one from the families – but I can assure you that I saw the literal “wear and tear” on some of my team members. It was a lot of work – trust me. Thankfully, for the family, they had us working alongside them –attorneys who are not only skilled in the estate/elder law fields, but also we’re uniquely trained to approach a situation based on facts (not emotions) and develop/execute a plan in the best interest of the client. Emotions are real – and they are quite prevalent with blended families, especially when money is on the table. So for all my blended families out there, when it is time to #DoYourEstatePlan, please ensure you work with a qualified estate and elder law attorney. We’re used to these sort of things…
Okay, let’s shift to the second story now…
This next family involved a Dad, Stepmom, and Son (of the Dad – hence why I say Stepmom). Let’s name Dad and Stepmom, Chuck and Nancy, and the Son, Ron. So Chuck and Nancy had some sound legal advice, because long story short, Chuck had some farmland – that was his family’s farm and had passed down the generations. Chuck had, within his estate plan, created a standby Trust for Nancy that essentially stated – if Chuck passed before Nancy, the farmland goes into a Farm Trust where Nancy is not the owner of the farmland, but while Nancy is living, she’s entitled to the income the farmland generates. Then at Nancy’s passing, the farmland leaves the Farm Trust and is distributed to Ron, Chuck’s son (not Nancy’s son).
Chuck ends up passing away, the farmland goes into the Farm Trust, and Nancy starts getting the income – everything was going beautifully and according to plan. Well, Nancy has a friend at church that is an attorney – and he thinks she’s “getting ripped off” because the income should be more than it is. So, Nancy hires said attorney to represent her. So, Ron, Chuck’s son, contacted our office to get our opinion. We did not create this Trust that I am talking about; rather, we had helped Ron, Chuck’s son, with his personal estate planning. So, he was more like, “hey can you guys help with this thing too?” At this point, we were like, “Yeah, We will try to get things settled down – let’s see if we can talk to Nancy’s attorney, explain what your father was intending to do, explain that the farmer farming the land is on contract for the cash rent amount…”
After a conversation with the attorney, we talked with Ron about, “Hey, what if we throw her a chunk of change – like what it would if she survived 20 more years [she was already 80 years old!], you could “pay her off” for the 20 years of cash rent and maybe she’d be agreeable to taking the money and extinguishing the Trust?” Well, Nancy’s church-friend and attorney was NOT playing around – he said, “Nope.” (Side note: Part of me wonders if he’s even discussed these things with Nancy. According to Ron, Nancy was super nice, respectful, agreeable to things … before this church-friend + attorney got into the picture, so take that for what it’s worth.)
At this point, we waved the white flag – clearly, this guy is wanting to push the issue and our firm does not do estate litigation. So, we laid the bad news on Ron and ultimately referred Ron to an estate litigator to “play hard ball” with Nancy’s attorney. And as I write this episode, this issue/this case has not been resolved to my knowledge –I believe it’s still going on … sadly. I can’t even imagine the legal fees that are accruing. (We didn’t charge Ron a dime. We just tried to step in and quickly help!)
This reminds me so much of something I tell clients all the time … You know, even though I only practice estate and elder law, routinely I will get asked a “legal question” out of left field – anyway, people will say, “Now, can I get sued if…” and I’ll stop them and abruptly say “yes.” Here’s something you all need to hear – ANYONE can sue ANYONE at ANY TIME for ANYTHING. And guess what? Good chance they’ll find an attorney at least willing to take the case. Take this last story as an example – is that even when a solid plan is created, sometimes crazy things still happen. Chuck did the BEST he could – he wanted to provide for his wife, Nancy, but keep the farm in the family too. So he created a very, very good plan – and there’s a chance his plan may not hold up.
On that, before I wind things up on this story, I must say that regardless of what happens to Chuck’s grand plan – he put his wife and family at least in a position to succeed – if they choose to crash his plan, that’s just a shame. But, at the same time, can you imagine, though, if Chuck had done NO planning at all? It would be, perhaps, an even bigger mess and his intention of “keeping the farm in the family” probably would not have carried out. So at the very least, let that be a final takeaway from this story – A PLAN is better than NO PLAN, which is probably even more critical when there are stepfamily members involved.
I was giving a presentation recently and an attendee asked me … “Jenny, my Mom and Dad are divorced, my Dad remarried, and I want to chat with him about this ‘estate stuff’ but I don’t know how. I’ll be seeing him soon at the holidays…” She said it almost-insinuating that maybe she’d chat with her Dad at an upcoming get-together. You know, every family is different – some are SUPER open and comfortable talking about this sort of stuff, but I would say most blended families aren’t. And sometimes they aren’t – and it’s not in a bad way. It’s just “they don’t talk about this stuff.” I encouraged her to set up a time for her and her Dad to grab coffee, dinner, or something to bring it up – especially since she was part of a blended family. Start the conversation privately, and see where it goes from there…that’s my two cents.
Alrighty, let’s shift to a sneak peak of next week, which we’re circling back to the “current trends” topic where we talk about things that are going on currently that impact my estate and elder law world – or maybe, things that I have stumbled upon on the news or social media that is relevant to this podcast. Well for next week, we are going to talk about the Menendez Brothers (yes, those famous brothers) and how there is a bit of a quiet story within everything about their parents’ estate and their inheritances. So tune in for that topic next week, Legal Tea Listeners, so until then, be well and talk soon!
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