I have been a lawyer for over 22 years. During that time, I have met with thousands of clients to discuss their estate plans. They have run the gamut from clients worth millions of dollars to those trying to protect their modest savings from Medicaid. Some are owners of successful family owned businesses or executives of Fortune 500 companies, while others have been couples living on their pensions.
No matter what the size of the estate, I always stress that a person has a major responsibility when he or she makes a new a Will, trust or family partnership. The first responsibility people think of is that they must protect their estate from greedy bureaucrats including the IRS and Medicaid. However, there is an even more fundamental responsibility that clients undertake.
How do we ensure that the beneficiaries enjoy the maximum benefit from the legacies we bestow upon them?
I enclose a recent article from The New York Times. It involves a renowned 40-year sandwich shop and an illustrious century-old specialty grocery and restaurant. The two culinary landmarks sit side by side in the same building and are run by two brothers, Sal and Jimmy Dell’Orto. Two brothers who have been in court battling one another for the last 14 years. And two families which work next to one another in the same building but have not spoken a civil word to each other in years.
The root of the brothers’ enmity goes back 40 years to when their parents decided to transfer the family business to their sons. Although their parents had the best of intentions, there was no planning on how the boys could work together to make the business prosper. Instead, the business was split between the children into two separate businesses. Unfortunately, both eateries shared a valuable asset which could not be divided. They both sold Hero-Boy, a six-foot hero sandwich consisting of 22 pounds of bread and delicious sandwich meats. Jimmy trademarked the “Hero-Boy” name and sued his brother Sal for trademark infringement. The complete story is told in thousands of pages of court documents. A wheelbarrow was needed to bring all of the documents into the courtroom. Regardless of the verdict, this is a case where there are no winners.
Some people think that they do not have to worry about the disposition of their estate if they do not happen to own a family business. However, there remain pitfalls where conflicts may arise unless proper planning is undertaken:
- How do you dispose of your jewelry and household furnishings so as to avoid conflicts among your children?
- How do you choose which of your children should serve as executor of your estate? Alternatively, can your children really work together as co-executors?
- How do you address the varying financial needs of your children? Sometimes, equal distributions do not meet the different needs your children may have.
- How do you choose who will serve as trustees for the trusts established on behalf of your spouse and your children? Should a professional investment advisor be retained to manage trust assets?
- When naming guardians for your children, will the guardians have the financial resources to integrate your children into their families?
The recent changes in the Federal Estate Tax makes this an opportune time to review your estate plan, not just for tax issues but for overall planning issues as well. Estate planning is needed regardless of the size of your estate. Call me to arrange a no obligation meeting to review your estate plan.
Kenneth R. Cohen, Esq.