First, what do I do? I specialize in trusts and estates, which means we do estate planning (drafting wills, trusts, end of life documents, etc), and administration (trust administration, probate, after-death planning). This means I’m really good at my area of laws (trusts, estates, and to some extent, taxes) and know very little about the others.
Also, I shouldn’t have to do this, but I’m a lawyer, and we’re all about covering our asses:
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Okay, so last time we talked about disinheritance. Today, let’s talk about actually inheriting things! I’ve read a lot of books where the whole set up for the book (or, TV show) is that the decedent sets up an elaborate set of restrictions on their bequests. Examples? Making the heirs live in a house together (they fell in love, who knew?!?), sending heirs on an epic treasure hunt (sadly, cancelled before I found out who inherited…), and other impressive shenanigans.
This has never happened to me. I’ve NEVER had a client who wanted to put strangely restrictive rules on their bequests. I’ve had plenty of clients who think their kids shouldn’t inherit the money at age 18 and restrict at what age their trust pays out to them (more on that in a minute), but I’ve never had anyone require that their kid move in to the house with the other heirs and battle it out American Gladiator style to determine who gets the inheritance. More’s the pity, I say.
Although not having any clients request that sort of thing from me means I don’t have to burst their bubble. While a lot of those things aren’t illegal, I’m pretty sure I could get a court to overturn a lot of those restrictions. There are a lot of things that you absolutely cannot do, such as act counter to public policy, which includes such things as requiring people to marry, or to divorce, to get their inheritance.
But the more elaborate schemes, while maybe not contrary to public policy, are still a little ridiculous. So you’d have to find a lawyer who was willing to draft it that way, a trustee or executor who was willing to enforce whatever scheme you’ve got planned, and a lot of cash set aside for a will contest suit after you’re dead and your heirs figure out what you had up your sleeve that had you chuckling your way into the grave.
But getting back to actual inheritances: They don’t just happen as soon as the dead person is carted out of the room (or when the will is read, which we already discussed is bogus). Inheritances take time to process.
In California, if you’re unlucky enough to wind up in a probate, it’s a minimum of a year before you’re going to see that kitty figurine your Aunt Norma left you. Minimum. I’m wrapping up a probate that’s 3 years old, and there are plenty that have been going on for a whole lot longer than that.
Even if you aren’t in a probate situation, there are legal hoops for a trustee or an executor to jump through that mean you don’t just get to walk away with the cash after the funeral is over. If only we could speed things up like TV does so that we wrap everything up in 45 minutes. Although, given I bill hourly, maybe that isn’t such a great plan…
Anyway, as I was saying above, a lot of parents restrict the age their kids receive their inheritance. Most people are willing to acknowledge that 18 year olds aren’t especially well-equipped to deal with large sums of cash headed their way. So we do a lot of trusts that pay out partially at ages 25 and 30, then end at 35. But I’ve noticed that the older the client is, the older they often feel their kids should be when they get their money. I call this the “realizing how dumb I was when I was younger” approach. In other words, they’re 50 and they look back and realize just how little they knew when they were 30, so they up the age the kids get the money to 40. And then they’re 80, realizing they didn’t know crap-all at age 60, and maybe John Jr. should wait to get the money until he’s 75.
At some point, you have to acknowledge that if the kid doesn’t know how to handle money at age 60, he’s probably never going to learn. Still, we draft what the clients want.
So make sure you have clients who take their life experiences into account when they’re thinking about how to leave their assets for their kids.
And don’t make them go on a snipe hunt. Or do, but realize that you probably shouldn’t do that in your own estate plan, no matter how much you want to set your daughter up with the adorable handyman next door.