You need a good estate plan if you want to:

  • keep your assets in your family
  • protect from lawsuits the assets you have bequeathed to loved ones
  • ensure that your loved ones can apply for government benefits such as Medicaid on your behalf
  • avoid pricey income taxes on retirement accounts
  • avoid estate taxes
  • keep your affairs private and out of the view of the general public.

A good estate plan for you and your family will also avoid the “last-minute switcheroo.”

Without careful guidance and representation from a qualified attorney, you will not achieve the goals listed above.

After having represented more than 2,000 people during more than a decade, I have seen many cases where the survivor altered the ultimate distribution of assets.

In some cases, the survivor has gone on to disinherit people that her first spouse did not want disinherited.

This is “the last minute switcheroo” most want to avoid.

The solution to this is to leave assets “in trust” with vested remainder interests and to put in place an agreement not to alter the plan.

Let’s say, for example, Kevin and Susie (the clients) have two children, Hobbs and Fritz. The clients are in their late 60s and they want to make sure Hobbs and Fritz will inherit what is left in equal shares.

They also want to make sure that it will not be subject to loss in divorce if either of their children get divorced.

Kevin and Susie also want to make sure their kids can apply for Medicaid for them should they become disabled. Legally, what should they do?

They should each make sure their papers direct their assets (upon survivor’s passing) go to their children in two separate trusts.

Each child can be the trustee of his own trust. Each child will therefore have total control of the trust that is for his benefit.

The trusts will be protected from loss if Hobbs or Fritz get sued. (Exceptions are IRS and child support. But, in all other cases, the creditors will be out of luck.)

This is like a built-in prenuptial agreement for one’s assets.

Kevin and Susie can also make sure that when their kids pass, the remaining funds will go to grandchildren and not in-laws.

If Kevin and Susie do not sign an agreement not to alter the plan, then if Susie survives, there is nothing preventing her from being taken advantage of by someone else in the future or from her getting remarried and her changing the disposition of her property.

Under South Carolina law, an agreement not to alter the plan gives the children rights that are enforceable in court.

So, if Susie survives and then redirects her property to a new love interest, or if she is unduly influenced to change her papers, the children (Hobbs and Fritz) will be able to assert their rights in court and have Susie’s new will or amendment to her trust set aside.

This preserves their inheritance and avoids the last minute switcheroo.

Mark F. Winn, J.D., Master of Laws (LL.M.) in estate planning, is a local asset protection, estate planning and elder law attorney.