Factual Scenario #3
Barbara A. Wilkins
Advanced Business Law – 312
Carol Parker
October 31, 2012

Willis and Wanda Notimeleft
Estate Plan

In reviewing the situation we know that the Notimelefts have a net estate of $8,500,000 and three children. The goals are: to cover their own needs; pass funds on to three children equally; avoid taxes; protect their funds; keep their business private; and give no money to charities. The issues here are: will the Priest be allowed to have an inheritance or would it be given to the church (which looks like a charity to Willis and Wanda); would Darlene’s manipulating husband spend the money and what would happen in the case of divorce; what about possible grandchildren (does Ohno have a sibling?); and when Derelict is in prison would his inheritance be required to pay restitution? What happens if Willis or Wanda are incapacitated? The first thing I would advise would be to open a Revocable Living Trust for Willis (Trust A), one for Wanda (Trust B), and a Children’s trust with a spend-thrift clause to keep Derelict from spending his inheritance foolishly. Trust funds up to $5,120,000 are excluded from estate taxes so I would fund Wanda’s trust to that amount, and fund Willis’ trust with the rest. This would give them lower estate taxes because they would not be paying on the total amount.
These trusts will avoid probate when the time comes which is a concern of Wanda and Willis.
I would list the children’s trust as the beneficiary to Willis’ and Wanda’s trusts upon their deaths. Wanda and Willis are still alive and we do not know of any life-threatening diseases, they will want to have access to their funds now while finding ways to help their children financially. Under the Gifting Plan, each child could receive $13,000 each year. This would reduce the estate (thus reducing the amount of estate tax) and give them a chance to watch their children’s behavior. They will also want to have Power of Attorneys over each other in case one becomes incapacitated; a Durable POA for financial matters and a Health Care POA for health issues. These steps are designed to solve most of the problems mentioned of Willis and Wanda and their children but will also come with problems of their own. When a trust is made it must have trustee(s) and successor trustees. Someone must be able to handle everything upon the deaths of Willis and Wanda when their times come. Willis will name Wanda as his successor trustee, Wanda will do the same with Willis but what happens if they are both deceased? They will need to name other successor trustees to cover that instance. While Willis and Wanda are trustees of their own trusts, and successor trustees on each other’s trusts, they will need to decide which of their children they would choose to handle the estates after they are gone. They could name all three children as successor trustees with the stipulation that they will go in a certain order. For instance, one would be named first successor, one second successor, and one third. In other words, the second one would only be able to act if the first one could not, etc. Or they could stipulate that all three would have to work together unless they are deceased or mentally/physically incapacitated. This is sometimes difficult if siblings do not get along or agree on anything. I would advise both Wanda and Willis to choose their daughter, Darlene, to be their first successor trustee. I would suggest that Daryl be chosen as second, and Derelict when everyone else is unable to administer the estate. I would also advise them to choose Darlene as their patient advocate. In a case where both parents are alive but unable to speak for themselves, or one is deceased and the other is incapacitated, it would be up to her to make the necessary decision on their health care issues. These are my proposals, and supporting reasons, to assist Willis and Wanda Notimeleft to protect their financial empire while providing for their family and avoiding taxes and charities. While there may be other options out there, I believe these would benefit them the most.

References
Wilkins, Barbara. 27 years of experience in the banking system