ESTATE PLANNING HORROR STORIES FROM THE REAL WORLD (#3)

“YOU GET WHAT YOU PAY FOR”

            Everyone has heard the saying “you get what you pay for”.  Although often used as a cliché, this week’s story reveals how it applies in the world of estate planning. 

            An 88 year old gentleman currently is suffering from dementia (a progressively worsening loss of brain function).  In 2005, however, he had the foresight to have prepared a Revocable Living Trust and Durable Power of Attorney containing healthcare surrogate provisions.  Our frugal gentleman shopped around Duval County for attorneys strictly by price and eventually found an attorney to prepare both a Revocable Living Trust and Durable Power of Attorney for a total price of $750.00.  Our frugal gentleman had two children, a son and daughter.  He was close to the daughter, but alienated from the son.  He named the daughter as trustee of the Trust and gave her authority over his finances under the Power of Attorney.  The gentleman’s home, which formed the bulk of the estate, was left to the daughter with the remaining assets to be distributed equally between the two children.

      As the gentleman’s mental health deteriorated, the daughter assumed responsibilities under the terms of the documents until such time as she could no longer adequately care for her father and wished to place him in an assisted living facility.  She consulted the son, who after years of being absent from his father’s life, now declared that it would be cruel to place the father in an assisted living facility and that he would take care of his father, so long as he would be paid a monthly amount equal to that which the daughter previously had been spending for home healthcare.  The daughter did not agree with these demands, so the son filed a petition in the probate court to have his father declared incapacitated and for him to be named as the guardian over his father’s person and property.  This has resulted in three (3) attorneys being involved, one for the son and one for the daughter and a court-appointed attorney for their father.

      The Revocable Living Trust was eleven (11) pages long.  The combined Durable Power of Attorney and Designation of Healthcare Surrogate was four (4) pages long.  Neither document contained any specific language giving the named trustee the power to transfer our frugal gentleman in or out of an assisted living facility, nor did it provide specific power for the daughter to decide where the father would live.  Although Florida Guardianship Law looks to Revocable Living Trusts, Powers of Attorney, Designations of Healthcare Surrogate as “less restrictive alternatives” to guardianship, because these documents were so sketchy and contained no specific provisions that would answer the questions presented to the guardianship court, the probate judge did not immediately grant the daughter power to act under the documents, but instead ruled that there were unanswered questions of fact and he would have to hold a trial to determine whether to uphold the documents or instead declare the son as the guardian.

     Just to respond to the guardianship petition and present  papers to the Court, the cost of the “$750.00 Trust” has now risen to $8,000.00 and counting.  In order to continue litigating the matter, with three (3) attorneys charging fees, the cost will increase!

     The attorney who prepared the “bare bones” documents spent only twenty (20) minutes with our frugal gentleman in both the design of the Revocable Living Trust and the explanation and signing of the documents.  They did not discuss the family situation in any detail.  Despite a life long history of problems with the son, the father neither took the time nor spent the money to develop a plan that would prevent the destructive litigation now going on between his son and daughter, and the attorney never asked any questions about the family relationship.  As you can see, it is not about documents, it is about results!  As this story illustrates, poor planning can produce results just as bad or worse than no planning at all!

     You decide:  Was the “$750 trust” a bargain?