Truth is stranger than fiction
This story is based on a real case involving a man who
created a solid plan for his estate that, unfortunately,
went completely wrong.
Here is what happened.
In 2005, Tim Donovan, owner of Optimum Manufacturing,
created a will leaving everything except his business to
his second wife, Cathy Carter.
Tim left
instructions in his will, which was part of his overall
estate plan, that his business should go to the trustee of
his living trust after his death. One would wonder why he
left his business in his will, exposing his business to
the general public upon his death instead of a more
private document, such as a trust. Tim also left specific
instructions on what the trustee was to do with the
business in the event of Tim's death.
Thinking that
it might be difficult to keep the business running without
him, Tim instructed his trustee to sell the business.
After the sale, all of the proceeds were to be divided as
follows:
45% to his wife Cathy
25% to his
mother
20% to his brothers and a niece and nephew
The remaining 10% was to be held in a trust for his
wife, Cathy Carter.
Tim had no children from either
of his marriages.
The good news was that in 2008,
Tim sold his business for a substantial sum.
The
bad news was that he died unexpectedly in a plane crash in
2009.
You would think that this should not be a big
deal. Tim made his wishes clear. The money he received
from the sale of the business should be divided as set out
in his trust.
Tim’s mom and other close relatives
sued the estate claiming that Tim had intended that they
get a portion of the sale proceeds, even though the
business was sold before Tim’s death rather than after.
Cathy, his wife, argued that Tim did not own the
business at the time of his death and so therefore, there
was nothing to leave to the trust and nothing to divide.
What did the court decide? The Court said that since
the business stock was a specific gift or property that
did not exist at the time of death and since no changes
were made to the will or trust, Tim must have decided not
to share the proceeds as he had previously outlined.
For some, this outcome may seem to be lacking in
fairness. On the other hand, it may have been exactly the
result Tim would have wanted. We will never know.
The lesson for us all is that if changes in your life
happen, as they always do, it makes sense to visit with
counsel to make sure that there are no negative impacts
that result from the change and to assure that your
intentions are clearly documented.
Some examples of
changes that may impact your planning and suggest the need
to seek counsel include:
Death of a spouse or child
Disability
Divorce (including divorces your children may go through)
Birth
of a child
Significant change in health for you, your spouse or your
children
Entry
into a nursing home
Loss
of a job
Lawsuit
Retirement
Sale
of a business or sale of another significant asset
Estate planning includes
planning for events during your lifetime. Request a
meeting today.
If you have questions,
click
here to have our office call to set up a time to
discuss this with you.
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