This is a continuation of the series I’ve been writing on the estate planning lessons taught to me by the recent deaths in my own family. My father was a dreamer. He left a job with a large company here to follow his dream of having his own business. He founded that business over 23 years ago and devoted most of his energy to keeping it alive and then to helping it grow.
Upon his death, I learned that the only asset listed solely in his name were the shares of his stock in the company. Further, he had a will that was over 15 years old. I’m not sure that his estate planning lawyer knew about the stock in the company and it doesn’t matter now. It has created an estate administration nightmare for our family because his assets were to be divided equally between his spouse and a family trust. What’s wrong with that?
1. They did not want a trust once the kids reached 23 but the will doesn’t contain language to that effect.
2. That tax status of the company is in jeopardy if a trust holds it’s stock. Luckily, such events were anticipated and we have a 2-year grace period to decide what to do with those shares before we have issues with the IRS.
3. The trustee must jump through additional hoops to get the shares and/or dividends from last year to the “new beneficiary” (i.e. the family trust).
All of these issues could have been resolved with careful planning and some knowledge of my father’s specific situation and a follow up to see if things had changed.
It is important that you work with an attorney who will take the time to sit and talk through what you want for your family – now and in the future – so your family can avoid these types of headaches later.