Tales From The Mason Law Horror Files . . .
Once Upon A Time . . .
Margaret and Jim Anderson raised their three children, Princess, Bud and Kitten in the 1950’s and 1960’s in the Greystone area of Asheboro, North Carolina (a leafy post-WW II neighborhood of 3 and 4 bedroom homes). The three kids grew up. Bud moved to Charleston, and Kitten moved to Atlanta. Princess stayed on in Asheboro.
In 1995 Margaret suddenly died. Although Jim was bereaved, wedding bells rang in 2003 when he married Eloise Haskell, a widow from nearby Mayfield. Eloise had an only child, Eddie Haskell, who lived in Oregon. The Anderson kids had a difficult time with Eddie on the rare occasions they saw him (Eddie had a difficult time concealing his manipulative and greedy nature).
Eloise and Jim’s children maintained a friendly, but never-too-close, relationship. Things became a bit strained, especially between Eloise and Princess, when Eloise began to show some early signs of dementia in 2005 (some forgetfulness, a bit of paranoia . . . but nothing too alarming). Jim remained active and vigorous, continuing with volunteer work at a variety of charities. Then, in 2010, disaster: Jim suddenly died.
After the funeral, Princess found a copy of Jim’s old will naming Princess as executor. She made an appointment with Bob Mason and asked him “tell me what to do?”
Princess, We Have a Problem . . .
Jim’s 2004 will left a life estate in the Greystone house to Eloise and also left all household furnishings to Eloise (with the proviso that Eloise allow Jim’s kids to have whatever). The will left the rest of Jim’s estate to his children.
After some research Bob discovered that in 2005 Jim deeded a tenancy by the entireties interest in the Greystone home to Eloise (a type of estate in land in which spouses own the land together and in which the surviving spouse takes the entire interest upon the death of the first spouse to die).
Bob also noted from documents dropped off by Princess that Jim’s Acme Investment Advisors mutual fund was titled in his and Eloise’ name.
After Princess qualified as Executor, Bob discovered that two other bank accounts were jointly titled with Eloise and that she had been beneficiary of Jim’s IRA since 2005.
At a followup meeting, Bob delivered the bad news.
“Let’s Get Bud and Kitten on a Conference Call”
In an Anderson family meeting (Bud and Kitten called in, Princess spent most of the time with the tissue box in the conference room), Bob explained that the Greystone home they were raised in became Eloise’s home (outright, to do with as she pleased, and not “just a life estate”) upon Jim’s death by virtue of the 2005 tenancy by the entireties deed. The will didn’t really matter.
Bob also explained that the jointly owned accounts were now owned by Eloise, and that as IRA beneficiary she was entitled to that account. Again, the will didn’t matter.
Bud and Princess both agreed that Eloise’s son, Eddie Haskell, “had a lot of lawyer friends.” They said that Eddie had been extremely ingratiating to Jim for years and “he probably talked Jim into setting up everything that way.” Bob explained that it would be very difficult to prove undue influence or fraud many years after Jim had retitled the house and the accounts . . . especially when Jim had been so active (and obviously in command of his mental faculties) up until his death.
To Add Insult to Injury . . .
Princess called Eloise and attempted (very politely) to ask if Princess could have some of the furniture, silver and china that had been her parents. Eloise grew vague and mumbled something about “thinking about it.”
When Princess called back a few weeks later Eloise exploded and demanded that Princess leave her alone and that if she kept pestering her she would have Eddie contact a lawyer.
What Should Have Been Done?
You tell me! A copy of the 9 1/2 hour DVD set “Elder Law University” ($149 value) will be given to the best response in the comment section below. The August 1 issue of Elder Law Update (and an accompanying post here) will discuss a few of my recommendations . . . and, of course, announce a winner
So . . . post away!
PS: IF YOU ARE ONE OF MY LAWYER READERS NO YOU CAN’T PARTICIPATE!!
AND NOW . . . HEH, HEH, HEH . . . THE ANSWER
Two weeks later and here we are.
Of course, the correct answer was Don James’ (below): He should have hired ME! But since he didn’t . . .
Billie Hansen, Kelly Anderson, and Celeste Spence all mentioned a wonderful idea . . . . COMMUNICATION! What a novel idea! True, people procrastinate, but marriages at any age are a major milestone. Out of a love and kindness to both families there should have been some frank discussions ahead of time.
The problem often is that no matter how well planned a will may be, they are relatively easy to change. A properly drafted prenuptial agreement can create enforceable rights in later heirs if the parties to the prenuptial agreement specify and agree that they will maintain valid wills that make the desired dispositions to various family members. Even if they later change their wills or titles to real property there may be a cause of action available to the heirs. Prenuptial agreements do nothing, however, to protect assets if this older couple is concerned about protecting assets in the event the new bride or groom ends up in a nursing home. Medicaid counts the assets of both members of a married couple, and North Carolina has something called the “Doctrine of Necessaries.” Under that old doctrine, each of a husband and wife are legally obligated for the other’s medical care regardless of any agreement they may have had between each other (this doesn’t apply if one is on Medicaid). In those cases a “prenup” wouldn’t have mattered, although a prenup is good to establish other understandings.
If the house was the major concern (as is often the case) Jim could have established either a revocable or irrevocable trust and titled the house in the name of the trust. He could have named Bud or Princess as the trustee (or perhaps even co-Trustee with Jim). The trust could have specified that Eloise would have a life estate in the home upon Jim’s death. It could have also specified that at any time after the establishment of the trust the house could not be taken out of trust without the written agreement of all trustees (that would have prevented Jim from later adding Eloise’s name to a tenancy by the entireties title).
There really is no ONE correct answer other than Jim and Eloise, out of love for their children, should have opened up the communications channels and been willing to seek some guidance.
This was a sad story.
Don James is a CPA and hangs out with too many lawyers! (Sorry, Don) I couldn’t decide between Billie, Kelly and Celeste . . . so I’ll send each one an Elder Law University DVD set. Ladies, please send your mailing address to Stacey Kinney at: sck (at) masonlawpc.com (replace the “(at)” with an “@” and close up the spaces!
For more reading on second marriage issues go see Tying the Knot . . . Or Just Moving In?