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Dear Dr. Don,
My ex-husband put his oldest son on all of his "payable on death accounts," intending to make it easier for the son to
receive and manage the funds after death. This was also done to save that part of my ex-husband's estate from probate.
My ex and I have two minor children together. My stepson was to be executor of his father's estate, which
would have provided very well for all three of the children. According to my stepson, the trust agreement never was signed.
Is there a way to show intent with regard to taking care of our minor children, or does my stepson now own
this sizable amount of money?
-- Pam Pecuniary
Dear Pam,
I'm not an attorney, but I asked one to help me to reply to your questions. Connie Fontaine -- an associate professor of
taxation and the Larry R. Pike chair in insurance and investments at The American College in Bryn Mawr, Pa. -- had these
comments:
She needs to independently determine whether or not the trust was executed. If she completely trusts
the stepson, she could rely on his word. But, as the mother and guardian of the deceased's minor children, she may have to
contact the attorney who drafted it, the trust/bank that may have participated in funding it, etc. She may need to retain an
attorney to accomplish these things. If there is no trust (because it wasn't executed) and there was no will, his property
will pass by intestacy and the minors will receive value.
Also, state laws do not allow someone to completely disinherit minor children. She needs to determine
how the state treats POD (or payable on death) accounts if minor children haven't been left enough/anything. The decedent
created a trust but didn't leave a will? If she has to retain counsel, the wording of the unsigned trust could possibly be
used to at least show intent.
Of course, it's always possible that if the children were essentially disinherited, the stepson could,
if he would, disclaim a certain amount for the eventual benefit of his half-siblings. She can, as the mother and guardian,
petition the probate court, if there even is a probate proceeding, to be kept in the loop.
Your letter paints a cautionary tale about the unintended consequences of people's actions in structuring
their assets to avoid probate.
Avoiding probate shouldn't be the
tail wagging the dog in estate planning. Getting
the assets distributed according to the decedent's
wishes is the goal, and techniques used to avoid
probate shouldn't conflict with that goal.
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