As the era of "Mad Men" came to a close on May 17th, errors abounded. The obvious misrepresentation came at the end when we were led to believe that Don Draper came up with the revolutionary Coca-Cola ad. I regret to inform many of you, that in fact, he did not. However, this was not the only error in the revolutionary tv show. Exactly 35 minutes in, pictured in this scene, Roger tells Joan that he has changed his will and left a significant portion to their son. Roger and Joan go back and forth a bit about the matter, and we are left with a good feeling about their relationship and the future of their son. Loose ends appear to be wrapped up. But it is not so.
I can only imagine that Roger did not have a good attorney, or used online software to formulate his will - otherwise he surely would have known that you cannot leave substantial amounts of property or assets to a minor. Joan and Roger's conversation should have, in fact, been a much longer discussion.
Now let's say Roger was in fact completely unaware of the laws regarding the inheritance of a minor, and failed to act accordingly. The following would happen. When Roger passes away, which, given his life style would most likely be before his son turned 18, a guardianship would have to be established through the court system. There, a guardian (most likely Joan) would be appointed by the court to handle the assets. She would have to account to the Court and be bonded. The bond acts as an insurance policy in these kind of instances, should the guardian make off to Burma with the money (or another remote destination of his/her choice). The entire process would likely require the assistance of an attorney, and would be expensive and time consuming. The guardianship would last until he turned 18. Which leaves another issue - is it appropriate for a high school grad to be given what we can only assume is millions of dollars, to do with what he pleases?
Well, Roger might allow that, but I am sure Joan would not approve. The smartest, and most flexible way to leave money/property to his son would be to set up a sub-trust. Any good estate planning attorney would have been able to tell him this. What this means is that in establishing a Trust (a standard part of any estate plan), Roger should set up a sub-trust for any funds being distributed to a minor beneficiary. A trustee would have to be named to oversee the management of the assets should Roger pass. Joan is the likely candidate here. The sub-trust could also specify an age at which their son would gain control of the assets. By doing this, they would avoid Court oversight, save significant amounts of money in bonding fees and attorney's fees, and increase the flexibility of Joan to manage the money. For example, she could use it to pay for health and medical expenses or his future ivy league education.
So, as you can see, Joan and Roger's conversation should have been much longer, and Roger most certainly needed to change his estate planning attorney. Even if your assets are substantially less than Roger's, a well constructed, legally sound estate plan is crucial when planning for your children's future.
If you have questions about estate planning, guardianship, or inheritance for minors, contact a knowledgeable estate planning attorney in your home state. From my Walnut Creek Law Office, I offer free consultations for trust, estate, will, and inheritance matters. Most attorneys will do the same.