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October 2008 - Ask an Expert: Estate Planning: Protecting Your Standard of Living

Protecting How and Where We Live Through Trusts.
By A. Kel Long, III

Affluent clients often express a strong desire to remain in their home regardless of advanced age or a decline in health.  However, given the significant cost of private staff to maintain a home and provide in-home care (which may range from $50,000 to well over $500,000 per year), that desire is often at odds with their children's interest in protecting their inheritance.  For clients who are intent on remaining home for as long as medically feasible, a properly drafted trust may provide the solution.  

While the matriarch (or patriarch) is still physically able to attend to her financial affairs, she is also able to control her living situation. With a properly structured trust and trust protector committee, these wishes can remain in place even if her ability to make decisions is compromised or her children pursue a guardianship action with the courts. 

Consider the following example: Bev has lived on and operated her equestrian estate for over thirty years, alone for the last eight years since her husband passed.  Recently Bev fell and has been unable to fully recover physically. Friends and her doctor have also noticed that Bev is not as sharp as she was and has trouble remembering things.  A dispute has arisen among Bev's children over whether to continue with in-home staff and care on the estate or move Bev to an assisted living facility across the country nearest her oldest daughter. Bev has always said she wants to stay on the estate to the end; and Bev has sufficient resources to provide for domestic staff and twenty-four hour in-home care. Her oldest daughter, under pressure from the daughter's husband, is pushing to be appointed as guardian and assume control over Bev's financial assets. 

Fortunately, before the injury, Bev's lawyer created a trust for her, and Bev transferred most of her assets to the trust. The trust provides that upon Bev's incapacity that she is to be maintained at the estate as long as medically feasible even if it means a significant drain on the trust assets. Bev named a bank as trustee to ensure that the exact trust terms are followed.  Just as importantly, Beverly named her three children and her four nieces and nephews as the trust protector committee.  The trust protector committee may remove and replace the bank if the bank's performance is unsatisfactory, and the trust protector committee, by unanimous action, must approve a change to Bev's living situation.  Because Bev's nieces and nephews are not beneficiaries of her trust upon her death, they do not have a conflict of interest in how much money is spent on her care. As long as one of the children or nieces and nephews believes that Bev can remain at the estate, then Bev will not be moved to the assisted living facility. 

With the ever-increasing life expectancy our population is experiencing, this story is becoming more and more common.  Without a trust directing how your assets are to be managed and spent, the court appointed guardian/conservator will take over the assets and make all the financial and living decisions.  The person who the court appoints may not be the person that you would choose.  Without a trust like that described above, your desires for where and how you will live may not be honored. 

 

About A. Kel Long, III, P.C.
Since 1994, A. Kel Long, III has focused on Estate, Tax and Business Planning for families and their holdings.  Kel has served as President of the Atlanta Bar Estate Planning and Probate Section.  He has also served on the Atlanta Estate Planning Council and Chaired the Fiduciary Legislation Sub-Committee to Repeal the Rule Against Perpetuities.  Kel is also a Certified Public Accountant.

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