Rebuilding a Trust and Lessons from Good Parents

November 19, 2014 - Posted by: admin - In category:

taxes - No Responses

Part of my afternoon yesterday was spent in a signing meeting with a very nice couple from Cache Valley. This husband and wife were in the office to sign their updated trust agreement, Utah Advance Health Care Directive and HIPAA Authorization forms, following our initial meeting last week. I have quickly developed an admiration and appreciation for this married couple and since our meeting, I have reflected on helpful lessons learned from this experience.  Below are a few thoughts.

First, the experience reminded me that sometimes it is better to do a total “teardown” and “rebuild” of a trust agreement (or other legal document), rather than trying to do various amendments throughout the existing document. After our initial visit, this couple requested various updates and improvements to their existing trust agreement (originally done about 15 years ago). When the time came to sit down and begin the process of making the desired changes, I quickly realized that although it was possible to do a “Frankenstein-like” series of amendments throughout the trust agreement, the end result would be just that, a Frankenstein-like document and trust structure, with a great many remnant provisions from 15 years ago and also many cobbled and “sewn-on” additions and improvements, scattered throughout many pages.  While this approach could work from a legal perspective, the outcome would be something VERY difficult to follow and accurately interpret and comprehend a few years down the road, including by family members who were then tasked with such interpretation and understanding and eventual execution according to the aggregate terms of the trust agreement.

The solution—the MUCH better way to accomplish the desired objectives of this married couple was to amend and restate the existing trust agreement so that the entire document was a new/updated/improved/modern instrument.  Newness by itself was NOT the objective.  Rather, the goal was to have a legal document that was internally consistent throughout, rather than being a hodge-podge of old and new parts. While this is certainly NOT the first time the “amend and restate” approach has been warranted in my practice, it was a good reminder to me (and now to you) that this approach is often the way to go, even if it means additional pages and, in some respects, more work on the front end for the attorney.  By the way, in case you are wondering, I did NOT charge more for this “extra” work. Rather, the clients paid the amount they were quoted originally. Nobody likes surprises when it comes to fees and here at Pharos Law Group, we ALWAYS stick by our quoted prices!

The other lesson I was reminded of yesterday (unrelated to the first) has to do with younger individuals, particularly young parents.  This wonderful couple asked me for two more copies of my book (“20 Myths of Estate Planning, What You Don’t Know CAN Hurt You”), so that they could give a copy to each of their children. I was flattered that they had already read my book (in less than 1 week) and also that they thought it was worthy of sharing with their children. However, the comments from the parents about how their children (each of whom had their own children) had not done ANY estate planning reminded me of the all-too-common reality that most young parents are in this same situation—having done NOTHING when it comes to planning.  Nothing at all! While this is consistent with the myth that estate planning is just for old people, it is also very risky and could lead to tragic consequences—tragic for the young children who are put at risk by the lack of foresight and care of their parents. I have addressed this topic previously on this blog and will, no doubt, discuss it again. I sincerely wish that we as estate planning professionals knew of a more effective and persuasive way to get through to parents of young children. We will keep trying.

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