Thomas E. Bentley, a CFP licensee with Truepoint Inc. in Cincinnati, was once going over the documents of a new client, an orthopedic surgeon, who had brought him a 10-year-old revocable trust document for review. It was part of Bentley's routine, and as he sat in his office reading, he found two people set to receive somewhere around $50,000 apiece. Bentley later met the client in his conference room and asked innocently who the two people were. The client had no idea.

As weird as it may seem, two strangers had seemingly popped up in the surgeon's carefully thought out estate plan. And as Bentley looked into it, he thinks he discovered the culprit: "control-V."

"More than likely what had happened is the attorney just copied a part of a trust from somebody else's trust, pasted it into their trust and forgot to remove those names," he says. "If they never hired us to work with them for wealth management, who knows if they ever would have caught it?"

Most trust problems are, luckily, not boilerplate language jobs gone awry. But they can make a person shudder nonetheless.

Sometimes the real horror of death is what happens after the funeral. Children are often left fighting over family assets. Sibling rivalries percolating under the surface of family harmony suddenly erupt from emotional abstraction into material reality, a fight over dollars and cents—or furniture. Even a father and mother's good intentions can go bad if a trust document is not well-thought out, is poorly written or if they just haven't planned five steps ahead.

One child might be left an ample insurance policy, the other a small company that is bankrupt. Siblings from a first marriage might be spoiled after the second marriage and the arrival of new children—or worse, shut out entirely.

Bentley recalls another example in which a client of his asked him to review a family limited partnership that held his family's lake house for its use by four siblings. The client found out later that if any of the kids wanted out of the partnership, the house could be sold to a third party. The other children couldn't say boo about it.

Another common mistake is that language in one document does not complement that in another. Say a couple, having two wills, die at the same time in a car wreck. Their wills ought to presume that one of them died first, the other second. And yet, boilerplate language being what it is, the language can sometimes turn out identical in both wills, and thus the couples are in a legal dead heat to the sweet hereafter, leaving behind them a confused estate.

Because there is no survivor, a carefully planned marital deduction meant to pass along the assets from the larger estate to the spouse can be wiped out (depending on a state's uniform laws) and the wealth instead goes into probate, where it becomes carrion for estate taxes, creditors, and other predators.

Gary Altman, a CFP licensee and estate planning attorney in Rockville, Md., says that many estate planning problems come about because clients turn to general practice attorneys, not specialists, or because clients try to draft the trusts themselves. Some attorneys use computer programs. "They're selling a product rather than planning," he says.

First « 1 2 3 4 5 » Next