For Community, Clients, Advisors
In the first installment of this blog series, I described how procrastination
caused unnecessary delay, expense, and worry for one family we recently
represented. Here is another.
What I now describe is a matter in our office right now. I have the family’s
permission to write and publish this expressly for the purpose of helping
Phyllis and Sam.
Phyllis and Sam were in their 80s. They lived comfortably in Skokie. They
had two adoring daughters and several grandchildren. They lived frugally
during their lifetimes and have accumulated some assets in brokerage accounts,
IRAs, stocks and bonds (share certificates and reinvestment accounts with
the share transfer agent) and their home. They had no debt. Some of the
accounts were in Phyllis’s name only. Some were in Sam’s name
only. But, mostly, the accounts and the house were titled in joint tenancy.
They had wills prepared in 1992 by another firm. They were “simple”
wills that made bequests to their grandchildren, generous gifts to several
charities and left the remainder equally to their two daughters. No trust
was prepared. As they got older, they began to have some health problems.
Of course, the Number One priority was taking care of Phyllis and Sam.
Sam had severe diabetic problems that led to the need for regularly scheduled dialysis.
Soon, Phyllis began to forget things and increasingly needed help in managing
daily affairs. In 2010, the family was informed that she had a brain tumor
and that her life expectancy was likely quite limited. The family rallied.
Both daughters live in adjoining suburbs and were there to help. However,
they weren’t really worried about their estate because they had
wills and most of the assets were in joint tenancy. Phyllis died just
a few weeks ago.
Sam did okay for a short while. But soon, without his wife, he realized
that, with multiple health issues, his quality of life was simply not
what he wanted it to be. His daughters were with him, helping him constantly.
His grandchildren came to see him. He made a very clear, knowing decision
that he would stop dialysis, fully understanding the consequences of his actions.
Soon thereafter, his daughters reviewed his 1992 will with him. They asked,
“Dad, does this will reflect what you want to happen now?”
His answer was, “No, not really”. He described for them the
relatively minor changes he wanted made. The next day, the daughters met
with me to review the changes that Sam wanted.
I looked at all of the assets – the brokerage accounts, stocks, bonds,
real estate. I wanted Sam to have a revocable trust because all of the
property could be distributed exactly as he wished by the two daughters
without government interference upon his death.
We needed to revise his will very quickly. There was no time to implement
and fund a trust. Sam’s daughters knew that his mental condition
could change at any time. He had stopped dialysis. His other medical conditions
had forced another hospital stay. I had to draft a new will over the weekend.
On Monday, Karen and I went to the hospital and met with Sam to ensure
that the will reflected what he wanted done. The will was signed in accordance
with the legal requirements on Monday afternoon. Sam would not have had
the legal competence to sign a new will had we come the next day.
Sam passed away on Friday, just a few short weeks after Phyllis died.
So, how do we settle Sam’s estate? What do we have to do?
Suzanne and I have now met with the heirs and have an inventory of all
the assets. All of Phyllis’s assets will become the property of
Sam’s estate. All of Sam’s sole property and the property
received from Phyllis’s estate will be distributed to the other
heirs and the daughters.
Unfortunately, the only way to settle both these estates is to bring two
probate estates in the Circuit Court of Cook County. It makes the estate
settlement laborious and time consuming compared to a private trust settlement.
The good news? There are provisions for “independent administration”
in Illinois probate law. This will allow the daughters to handle most
of the administration work without court supervision. It will ease the
burden to a great degree.
So, what lesson have Phyllis, Sam and their family taught us? There are
two. First, procrastination in estate planning limits the options available.
Don’t wait. No one expects both spouses to die in rapid order, but,
it does happen. Second, while joint tenancy accounts are a simple solution
and work well if one spouse dies, there can be severe complications, and
they don’t work in the event of a common disaster or in the event
that one spouse dies soon after the other.
I’m going to do everything I can to make the estate settlement as
easy as possible. However, I wish I could have helped this family more.