This is the first article in a series called “Avoiding Trust Litigation.” Buffington Law Firm’s trust litigation attorneys have litigated hundreds of trust litigation scenarios. There are certain estate planning practices that seem very prone to resulting in unhappy beneficiaries, or misbehaving trusties, or other paths to litigation. In this series we will discuss these scenarios in the hope that it will help people avoid them or, failing that, that it will help in an understanding of the problems and their causes.
The “Brady Bunch” trust scenario.
A “Brady Bunch” trust is a trust in which the two trustmakers have children from earlier prior marriages. It is, of course, very common that a couple remarries later in life and each spouse has children from an earlier marriage or relationship. Very frequently, the children from these two marriages are grown and have left home, thus they do not really know their new step-siblings and did not grow up as a family with them. This differs from the pleasant 1960s TV sitcom “The Brady Bunch” where the step-kids do grow up together as a family in a kind of blissful harmony that many families only aspire to and which mostly exists in Hollywood sit-coms rather than in actual reality.
Despite all this, very often the newly married (but not for the first time) couple decides to create a revocable trust together (also commonly known as a “living” trust). Most people have heard that living trusts in California are a good and responsible thing to have. When electing to create a trust, most people simply want to implement their bequests, avoid probate, and do whatever tax planning that might be feasible. But most families of this kind are not the Brady Bunch and when creating a trust together they are often sowing the seeds for future trouble. While a trust in common may make sense if the trustmakers (“trustors” in legal jargon) are comparatively young and beginning their roads to financial independence, this may not be a wise choice in the case of a comparatively older couple in which each spouse has separate assets independently acquired, and different heirs. An explanation is in order.
At the end of the day, the children of a second marriage like this will more often than not greatly resent the notion that “dad’s children will inherit mom’s money” or vice-versa. This appears to be common human nature. After all, the children did not grow up as a family with the other spouse’s heirs. Further, once the first spouse passes away, many of these trusts leave the surviving spouse in charge of the deceased spouse’s estate, even though it is often supposed to eventually pass to the deceased spouse’s adult children. There are few surer paths to litigation.
Firstly, the surviving spouse usually has little interest in his or her now deceased spouse’s children after the passing of their parent and does not really want to owe fiduciary duties to them. And yet, these “Brady Bunch” trusts usually provide for exactly that. As harsh as it is to say, very often the surviving spouse does not regard the children of the deceased spouse as family, nor do these children so regard the surviving spouse. Sometimes the surviving spouse acts unequivocally to the advantage of his or her own children by concocting ways to funnel money to them, in a way that, to put it mildly, the deceased spouse would not tolerate if he or she were still alive. Other times the children of the deceased spouse are deeply suspicious of a perfectly innocent surviving spouse, and torment him or her with trust litigation in which they endlessly question the handling of the trust estate. The legal bills escalate, and the courts and lawyers are kept busy. I assure you that this is common and no exaggeration.
The upshot of all this is that there may be better ways for a second marriage to do their estate planning than to create a trust in common. Perhaps separate trusts, with the other spouse as one of the beneficiaries, is a better option. There are many variants of this theme or other estate planning approaches instead of simply creating a single trust for the two spouses. In our opinion, the solution should avoid the surviving spouse owing fiduciary duties to the deceased spouse’s children. There are many better ways for the deceased spouse to provide for the surviving spouse, if this is the goal.
If you are involved in a trust dispute or trust litigation, Buffington Law Firm’s team of trust and estate litigation attorneys invites you to contact us for a Free Legal Consultation. All consultations are with an experienced trust litigation attorney and are fully protected by attorney-client privilege. There is never any charge or obligation.