Hi there, Bridget MacKay. I’m an attorney serving clients in Santa Rosa, CA. I practice in the area of estate planning, probate, trust administration and today, my blog is going to be in two parts, and it’s titled, “Four Funerals and a Wedding”, and it’s a tale of caution. I do these once a year, usually in my blogs and you’re going to hear the story of four friends, Anna, Beatrice, Carla, and Dee Dee. In our first portion or part one of this blog, we’ll hear about Anna and Beatrice.
The first funeral being, unfortunately, Anna’s. She died tragically and she died young. She never even got around to drafting a will. Her assets went through probate. Her heirs were determined by the laws of California, which is basically a fixed formula to determine your heirs when you don’t have a will or anything in place. And Anna was unmarried but had a long-term partner, who wasn’t considered in the pre-determined laws of California. So, even though she had a long-term partner, a romantic interest that she lived with, all her assets went to her blood relatives and none of them went to her long-term partner, which is how she would have liked it.
On to funeral number two and that funeral was for Beatrice, who had learned from Anna’s death and created a trust to avoid probate and dictate who she wanted things to go to. Unfortunately, she took this trust and stuck it in a drawer, and never reviewed it or updated it. She sort of felt, “I’ve got my affairs in order, that’s all I needed to do,” and moved on with her life. Well, unfortunately, Beatrice died 20 years after she made her trust. Her estate didn’t go through probate, like Anna’s, but it didn’t reflect her current relationships and her current life. She had been married for the past 10 years to Ron, but her Trust had all her assets going to her former long-term boyfriend, Frank. Imagine Ron’s shock when he discovered that everything, including the condo that he lived in with her, was left to Frank.
Now for part two of “Four Funerals and a Wedding.” As you recall, in the last blog in part one, we were talking about our four friends, Anna, Beatrice, Carla, and Dee Dee. Anna and Beatrice were our first two funerals, and today, we’re going to talk about our next two funerals and our wedding. The third funeral was their friend, Carla. Carla did get the lesson from Anna and Beatrice and she put her estate together with a trust, kept it updated which Beatrice didn’t do, so she was avoiding probate and she was keeping on top of who her beneficiaries were in her trust. And she had worked for a company here in California called Autodesk since she had graduated from college, and she had built up a large 401K plan while she was working for them.
At that time, when she filled out her beneficiary designation, she had no children, she was unmarried and it was going to her mother. Fast forward, all this time she’s been updating her trust but not her beneficiary designations on her retirement assets. She dies and her mother is in a nursing home with dementia. She is the only beneficiary of her 401K. Her designation deprived her husband, now husband and children of all the assets in the 401K she had, and on top of that, it did go to her mother but Medi-Cal took most of it when her mother died because they had paid out for her care and when they pay out for someone’s care and that person dies they can recover from that person’s estate monies that were paid out on her behalf. All of the 401K practically was lost in the recovery process.
Funeral number four, Dee Dee, the last friend who was basically the piggy who built the brick house and laid the cauldron out for the wolf. She had seen her friends’ demise. She had witnessed the nightmares that their family had gone through in the various situations in dealing with their estates and she went to a qualified estate planning attorney who put her trust in place, made sure her beneficiary designations were proper, and had her in to review regularly her estate plan. Her death, tragic as it was, allowed her family to grieve and be left financially confident. They weren’t worried about where the 401K was going or who was inheriting the house. Her husband was able to finance the wedding of their youngest daughter who was able to have a wedding with her mom there in spirit because nobody else was worried about the chaos that her three friends had left behind by not looking at everything globally. All of these friends had the best intentions for their family but only Dee Dee had a well-coordinated and updated estate that achieved her goals.
Bridget Mackay works with clients in Santa Rosa, CA, and throughout Sonoma County.