Creating Separate Property Trusts

Estate planning and living trust for separate property

Roger’s* first wife died when he was 67 years old. Roger ran a car repair shop, which was a family run business that employed all his five children. He later met Angela*, who was 52 years old, and wanted to re-marry. Roger realized that since he wanted to provide for both his new wife and his children, he needed to have his estate planning documents completed. Those documents were drafted by an estate planner prior to his marriage to Angela, and were meant to express Roger’s wish to give his residence to Angela and the family business to his children.

When Roger died, I met with Tony* and Helen*, two of Roger’s children, who were already embroiled in a bitter dispute with their stepmother Angela. Tony and Helen were almost the same age as Angela, at 55 and 51 respectively. When I read Roger’s estate planning documents, it was evident that the estate planner who had drafted Roger’s documents did so incorrectly, allowing Angela an opportunity to assert rights to more of the assets than Roger ever intended. I represented Tony and Helen in the litigation of this contentious case for nearly three years. I helped them provide an accounting of the family business in order to show that no community funds were used to infuse the repair shop – and therefore deny Angela’s claim to part of the business.

Ultimately, the Court ruled in Tony and Helen’s favor. However, the resulting verdict cost both parties large amounts in attorney’s fees. Had Roger’s living trust been written more carefully, it would have eliminated Angela’s ability to assert additional rights to Roger’s other assets as a surviving spouse. While happy to be vindicated, Tony and Helen frequently lament how all of this could have been avoided if their dad had gone to a more experienced estate planner.

* Identities have been changed to protect client’s privacy

A Message from Shirley

As people get married and have children later in life, frequently both partners have built up significant assets of their own prior to marriage.   Whether a first marriage or second marriage, it may be advisable for individuals in these types of situations to look into creating separate trusts before they co-mingle assets. Specifically when individuals re-marry, there is a higher risk of litigation that could ensue between the stepchildren and stepparent. It is crucial that these Estate Plans be prepared by an experienced trust and will attorney with Litigation experience to minimize the chance of disputes.