Tales of Caution: Joe & Betty Brown

Hi, there. Bridget Mackay here. I’m an attorney practicing in Petaluma in estate planning and elder law. Today is our video blog, “Tale of Caution.” I’m going to tell you a story about Joe and Betty Brown. Their names have been changed to protect the innocent. Joe and Betty created a trust, and placed their three children in order of birth as trustees. Joe Junior who was their oldest was the first trustee. If he could not be trustee, then their second child, Beth was next. Then finally if Beth could not be the trustee, then their youngest daughter, Samantha, was to take over. They did this, even though they had concerns about Joe because he had filed two bankruptcies and had a foreclosure on his house as well as a spotty employment record. But they felt he was the oldest and deserved the position. They felt he would be offended if they placed one of his younger, more responsible siblings in that position. They didn’t want to hurt his feelings.

Ultimately, they thought he wouldn’t ever financially harm his siblings or be unfair. And the way they had written the trust is that everything was to be distributed equally. What could go wrong? A lot. By the time Betty and Joe passed away, Joe Junior was in the midst of his business and marriage failing. He used all the cash that was in the trust to bail out his business. And all the while, promising his siblings that the money was there. He did this quickly, so they never got an accountant to know what was happening.

Long story short, $60,000 later in legal fees, his siblings were able to save the proceeds from the sale of the house, the only remaining asset in the trust, and exclude Joe Junior from inheriting. They did get some of their share of the estate in the end. But the moral to the story is, choose your trustee wisely. They should be financially sound. They should be decision makers. They should be doers willing to get things done. They should know when they need help, and be able to ask for it. And it goes without saying that they should be trustworthy. They shouldn’t be measured or decided on because of their birth order or if you fear some feelings will be hurt. Because in the end, you can never change this decision once this person starts acting in their role.

You never get a do-over in this situation, so it’s really important that you choose the right person. Whatever you do, never name two or more people or kids because you think they will balance each other out. An experienced attorney can guide you through this process, and discussing thoroughly what your options are, and helping you choose the right person.

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