When Slade passed away two years ago, he left all of his assets to his wife, either through beneficiary designation or jointly owned property.
The two had worked hard and had been married for over 40 years and while they weren’t rich, they had a beautiful home, a vacation cabin for skiing and a comfortable retirement account put aside. Although Slade and Courtney had established a trust before his death, they had never fully completed the re-titling of their assets, so the trust remained largely empty. After Slade’s death, the process of re-titling the assets went on Courtney’s back burner as she dealt with her grief as well as the everyday grind of living on her own and taking care of all the household issues.
Early one snowy morning, Courtney was late to a doctor’s appointment, and despite the poor conditions, she decided to drive, even speed a little, to get there on time and not have to reschedule. As she approached an intersection, she was distracted by a weather alert on the radio and took her eyes off the road just long enough to miss the light turning yellow, then red.
As Courtney continued through the intersection, a bus carrying a group of skiers to a nearby ski resort crossed her path. Courtney slammed on the breaks, but the intersection was full of ice, and her vehicle crashed into the side of the bus, flipping it over and causing multiple severe injuries to the people inside. Courtney was also injured and several people were taken away in ambulances.
When the dust had cleared, her insurance company informed her that her policy was insufficient to cover the damages and ongoing medical care caused by the accident, and within a few weeks, attorneys for each of the victims filed suit to obtain the money and assets Slade had left Courtney upon his death. As the accident was Courtney’s fault, it was open and shut case, and the attorneys were successful in acquiring the assets on behalf of their clients. Courtney has no choice but to file for bankruptcy and move in with her son and daughter-in-law.
This financially devastating situation could have been avoided if Slade and Courtney had planned properly and used their trust for its intended purpose. An attorney could have counseled them to set up protective trusts for each other with a co-trustee. If they had done this, Courtney could have selected her friend Julie, who is also her CPA, to be a co-trustee of the trust established for her at Slade’s death. If that had been done, when the attorneys contacted Julie to demand money from the trust Slade set up for Courtney, Julie would only be allowed to disburse funds for Courtney’s needs, and not for the judgment creditors. The estate that Slade and Courtney worked hard to build together would have been protected and preserved for Courtney and her children.
Proper estate planning can do much more than help you avoid probate and save on taxes. In the case of a scenario like this, a trust plan would have provided Courtney access to her money without permitting creditors access. To avoid a costly and devastating situation like this, contact a qualified estate attorney who can help you protect your assets and prepare for your future.