Meeting Sam and Julie
I was introduced to Sam and Julie by a mutual friend, John (all names have been changed). Sam and Julie wanted to protect what matters most to them, their children. So, we sat down to discuss their plan and how I could help.
We went over their family dynamics, their financial situation, and their long-term goals and expectations. During our conversation, we discussed the differences between Wills and Trusts, and how each may impact their overall life strategy. We also talked about who the key players would be if something should happen to one or both of them. At the end of our conversation, we had a list of homework items before we could create their estate plan. I handled the legal stuff, and they took a couple others as they needed to confer and make some decisions.
All the homework items were complete a week or so later. Sam and Julie sent me the updated information and I told them what I found through my research. Once we all agreed on the plan, we went over the final details.
Sam and Julie decided to use a trust over a will for a couple of very important reasons:
First, protecting the children.
Sam and Julie are in their early/mid 30’s, they have two sons and another one on the way. Sam and Julie have some money in savings, they contribute to their retirement accounts, and they have life insurance policies. As is common, the life insurance would substantially increase the value of their young estate. However, I did notice they may fall short of their goals and I recommended they talk to a financial professional.
Their primary objective was to protect what matters most to them, their children. As such, it made sense to discuss how, and when, the children would receive their inheritance. We drafted a distribution pattern that would allow the children to receive money for life’s necessities and school; yet, the bulk of the trusts principal would remain protected until they reached certain ages.
Second, naming guardian(s) and trustee(s).
Sam and Julie wanted to be certain that Sam’s brother, who happens to be a CPA, would have control over the money in the trust. Further, that Sam’s sister would be the first in line to take care of their children. While Julie has a close-knit family, her siblings don’t share the same religious views as Sam and Julie. This proved to be the deciding factor in their guardianship decisions. For more on selecting a guardian, click here.
Third, liability protection and flexibility.
Under current Missouri law, Sam and Julie’s trust will provide tenancy by the entireties (“TBE”) protection to the assets they properly place in it. Property titled TBE affords the owners a good deal of protection from creditors and other liabilities. It can be a great defensive tool for the “what ifs” in life. Since Sam has dreams of starting his own business, he understood the benefit of protecting his personal assets against future liabilities.
Drafting the Documents
I drafted Sam and Julie’s revocable living trust documents, powers of attorney, medical documents, and guardianship provisions. A few days later we reconvened to finalize the documents. I provided some follow-up instructions, and Sam and Julie walked away with peace of mind and a phone number to call if they ever had any questions.
All in all, Sam and Julie are happy with their new plan in place. They have confidence that they have protected what matters most. They also have a new team to help them when goals and dreams shift. Congrats guys!