By Bill Burmeister- Michigan Church Extension Fund

It is important to designate trusted individuals to serve as our Personal Representatives, Successor Trustees or Durable Power of Attorney. The following is a surprising story that could have drastically changed the distribution of one person’s estate.

An elderly widow had three natural children and wanted a gift to ministry included in the distribution of her estate. Her desire was to leave 10% of her assets to her church and the balance divided equally between the three children, which were stated in her valid will. Her estate was valued at about $500,000 with a home at $150,000, a $15,000 Charitable Remainder Trust, and an investment account valued at $335,000.
There was no IRA but she received a pension from her late husband’s employer and social security. She had given one child Durable Power of Attorney and he was helping her by paying her bills and managing her finances. That child also was included as a joint owner of the checking account, making it convenient to pay the bills.
When reviewing her plans, it was discovered that a “Transfer on Death” designation was put in place on the investment account and the deed to the home was redone, transferring ownership upon her death to the child that was given the Durable Power of Attorney authority.
Since the home was now being transferred with a “Lady Bird Deed,” the checking account was jointly held and the investment account would all go to the one child at the mother’s death, the only thing that would be given to all three children is a small annual distribution from the Charitable Remainder Unitrust for 10 years. Ministry would receive the remainder balance from the Unitrust.
So, rather than ministry getting $50,000 and each child receiving $150,000, with the changes made under the Durable Power of Attorney, the ministry would receive about $15,000, two children about $2,500 each from the Unitrust distribution, and the third child would walk away with $487,500. Even though her will stated an equal distribution of assets, the entire estate would have been gone before her estate ever got to Probate Court.

Most attorneys recommend reviewing your estate planning documents every 2-5 years to insure that your wishes are carried out. It does not mean you will make wholesale changes, but allows you to refresh your memory and adjust if your desires have changed.

This document is provided to assist you in your estate planning process and is not meant to offer financial or legal advice.  Please contact your Attorney or Financial Advisor to obtain appropriate professional advice relevant to your particular circumstances. For more on financial planning read Estate Planning, Should I Have a Will or Revocable Living Trust, or A Christian Preamble.