Individuals who spent their lives building security for their family want to make sure that their children and grandchildren receive the benefits of their life-long labors. For many people, keeping the family legacy in the natural bloodline is one of the most important estate planning goals.
Without an estate plan, people who marry into a family (or even strangers) may end up with the entire family legacy. Children and grandchildren may end up with nothing at all or only a small part of the legacy built for them.
The situation described in this article is based on a real-life family’s experience. It illustrates extremely well how a family legacy can follow different paths, depending on how a parent addresses estate concerns.
Dr. Smith is a hard-working Georgia orthopedic surgeon who built a substantial family financial legacy during his lifetime. He and his wife divorced years ago. The doctor is still very close to their only child, Christina.
Christina is in her third marriage. Dr. Smith does not like or trust Christina’s current husband and is fairly certain this marriage will not last. Christina has two children from her previous marriages. Dr. Smith spends a lot of time with his grandchildren and is very fond of them.
When Christina is diagnosed with cancer, her prognosis is uncertain. With treatment, she may live for many more years — but there is a chance that the treatment won’t work as planned.
Dr. Smith wants to make sure that Christina and his grandchildren inherit the family legacy he built. His biggest fear is that Christina’s husband somehow might end up with some or all of the property and assets in his estate.
Individuals in situations like Dr. Smith’s typically choose one of several options for addressing estate concerns. The eventual outcome differs, depending on the choices Dr. Smith makes. Here are the possibilities:
Dr. Smith feels certain that Christina and his two grandchildren will inherit his estate on his death, since they are his only blood relatives. He so consumed by Christina’s illness and his practice that he takes no steps to make sure his legacy stays in the family.
On his death, Georgia laws of intestate succession will determine distribution of his estate. Christina will inherit the estate outright (with full ownership of the property and assets) if she survives her father. If she predeceases the doctor, the grandchildren inherit the legacy. In either case, Christina’s husband likely will eventually have access to and control of the family legacy.
Like many people, Dr. Smith thinks that he only needs a Will to pass his family legacy along to his daughter and grandchildren. Since he is extremely busy, he goes online and uses a DIY (Do-It-Yourself) service to make a Will, leaving all his assets to his daughter. He assumes that when she dies, she will leave the legacy to her children, as they have discussed many times.
Under Dr. Smith’s Will, Christina would inherit the family legacy outright on his death. When she dies, she could leave her entire estate to her husband (as most wives do) — or her husband could make a claim against the estate for spousal support under Georgia law. Based on Dr. Smith’s Will, Christina’s husband eventually could receive the entire family legacy, with the grandchildren receiving nothing at all.
Dr. Smith realizes that he should take the time to talk with a professional about the future of his family legacy. He consults with an experienced estate planning attorney.
His attorney explains that a Will alone cannot ensure that his legacy will stay in the bloodline — and that doing nothing has the same result. Fortunately, by including a trust in his estate plan, he can make absolutely certain that his daughter and his grandchildren benefit from his legacy — and that his son-in-law does not get any part of it.
To accomplish his goals, the lawyer drafts a trust document to address Dr. Smith’s concerns. The document takes all the unique aspects of his situation into account.
In the trust document, Dr. Smith names Christina as the beneficiary of the trust following his death. The trust document further provides that on Christina’s death (whether it is before or after his own), the grandchildren become the beneficiaries of the trust. Under the carefully structured trust, Christina’s husband will not have any access to the family legacy, before or after Christina’s death.
The future is always unpredictable — no one knows how family events will unfold. In reality, Christina passed away before her father, and Dr. Smith died a few weeks later. Christina left a Will giving her entire estate to her husband.
Christina’s husband remarried a month after her death. He believed that he was entitled to the entire family legacy and contacted the personal representative of Dr. Smith’s estate, asking for the money.
Fortunately, Dr. Smith had followed the third option described above and consulted with a lawyer. He created an estate plan that included a trust. The terms of the trust named Christina as the beneficiary. But the trust terms also provided that in the event of Christina’s death, the grandchildren would become the trust beneficiaries, and that the trust would continue to be managed solely for their benefit.
As a result, Christina’s husband was not entitled to any share of her family’s legacy. Dr. Smith’s grandchildren became the sole beneficiaries of the trust after Christina’s death. The legacy stayed in the family bloodline.
The outcome in this real-life situation demonstrates how planning ahead with an experienced estate planning attorney ensures that your family legacy will end up in the hands of your chosen beneficiaries (your children and grandchildren) — and not in the hands of someone that you do not want to have it.
Additional discussion about how asset protection trusts can safeguard a family legacy is available in two other blog posts: How To Protect Your Children’s Inheritance From Strangers and Gold Diggers and The Role of Asset Protection Trusts in Georgia Estate Planning.
In our Cartersville estate planning practice at Asset Protection & Elder Law of Georgia, we focus on protecting our clients and their assets, whatever their unique circumstances may be. Ensuring that children and grandchildren benefit from the family legacy is an important goal for many of our clients.
We provide estate planning services to clients throughout the communities northwest of Atlanta, including in Bartow County, Cobb County, Cherokee County, Gordon County, Floyd County, and Paulding County.
Call us at (770) 382-0984 or contact us through our online form.