This story is based on a real case involving a man who created a solid plan for his estate that, unfortunately, went completely wrong.

Here is what happened.

In 2005, Joe Bartlett, owner of Optimum Manufacturing, created a will leaving everything except his business to his second wife, Cathy Carter.

Joe left instructions in his will, which was part of his overall estate plan that his business should go to the trustee of his living trust after his death. One would wonder why he left his business in his will, exposing his business to the general public upon his death instead of a more private document, such as a trust. Joe also left specific instructions on what the trustee was to do with the business in the event of Joe’s death.

Thinking that it might be difficult to keep the business running without him, Joe instructed his trustee to sell the business. After the sale, all of the proceeds were to be divided as follows:

  • 45% to his wife Cathy
  • 25% to his mother
  • 20% to his brothers and a niece and nephew
  • The remaining 10% was to be held in a trust for his wife, Cathy Carter.

Joe had no children from either of his marriages.

The good news was that in 2008, Joe sold his business for a substantial sum.

The bad news was that he died unexpectedly in a plane crash in 2009.

You would think that this should not be a big deal. Joe made his wishes clear. The money he received from the sale of the business should be divided as set out in his trust.

Joe’s mom and other close relatives sued the estate claiming that Joe had intended that they get a portion of the sale proceeds, even though the business was sold before Joe’s death rather than after.

Cathy, his wife, argued that Joe did not own the business at the time of his death and so therefore, there was nothing to leave to the trust and nothing to divide.

What did the court decide? The Court said that since the business stock was a specific gift or property that did not exist at the time of death and since no changes were made to the will or trust, Joe must have decided not to share the proceeds as he had previously outlined.

For some, this outcome may seem to be lacking in fairness. On the other hand, it may have been exactly the result Joe would have wanted. We will never know.

The lesson for us all is that if changes in your life happen, as they always do, it makes sense to visit with counsel to make sure that there are no negative impacts that result from the change and to assure that your intentions are clearly documented.

Some examples of changes that may impact your planning and suggest the need to seek counsel include:

  • Death of a spouse or child disability
  • Divorce (including divorces your children may go through)
  • Birth of a child
  • Significant change in health for you, your spouse or your children
  • Entry into a nursing home
  • Loss of a job
  • Lawsuit
  • Retirement
  • Sale of a business or sale of another significant asset

If you have questions, click here to contact us to set up a time to discuss this with you.

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