Summary: The dispute and
litigation surrounding Blechman's estate serves as a potent lesson that estate
plans can be contained in many different types of documents, not just wills and
trusts. If you have an estate plan that includes many different documents and
multiple non-probate transfers, it is important to make sure that all of the
pieces to your plan are "in synch" with each other so that your true
estate planning goals are clear to those whom you leave behind.
The dispute over the estate of Bertram Blechman in the Florida courts
recently offers a clear illustration about the importance of understanding how
broad your total estate plan can be, and the vital need to make certain that
each part of your plan meshes with all of the others so that your objectives
are clear and can be fulfilled.
In 2009, Blechman and his sister formed an LLC named Laura Investments
LLC. The LLC's operating agreement, which is the document that controls the
entity, gave each of Blechman and his sister 50% ownership of the company. The
agreement stated that, unless an owner's will said differently, his or her
shares immediately passed to (and vested in) that owner's living children in
equal shares upon the owner's death.
Blechman also had an estate plan that included a will and a trust. The
will stated that "the residue" of his estate was to go into the trust
and named the man's son as executor of the estate. A 2010 amendment to the
trust stated that Blachman's long-term girlfriend was to receive his house and
certain amount of distributions from the LLC assets, which were to be used to
pay for the maintenance of the house. Blechman's will, however, will did not
expressly make any provisions for the ownership interest in the LLC.
When Blechman died in 2011, he was survived by the girlfriend, the son
and a daughter. The girlfriend sued to receive the money set aside for her in
the trust document. Blechman's children, however, contended that the LLC
operating agreement took precedence and, under it terms, the 50% ownership of
the LLC was a non-probate asset that transferred directly to them.
The trial originally ruled that the LLC interest was a probate asset.
That outcome would have benefited the girlfriend, as the LLC assets would have
gone into the probate estate and then would have poured over into the trust,
meaning that the girlfriend would have been eligible to receive the payments as
dictated by the trust. That ruling was overturned by the appeals court, which
ruled that the transfer provisions contained in the LLC operating agreement
were a non-probate transfer.
While many people may think only of death beneficiary designations (like
pay-on-death or transfer-on-death) or living trusts when it comes to estate
planning transfers that avoid probate, the reality is that estate plans can be
contained in a variety of documents and probate avoidance "can be
accomplished in a myriad of ways," as the court in Blechman's case wrote.
The LLC operating agreement created just such a probate-avoiding transfer. The
moment Blechman died, the LLC ownership immediately passed outside probate to
the children. Because this asset did so, it never became a probate estate and
therefore never became owned by the trust.
Clearly, all the pieces of Blechman's estate plan did not seem to be
"in synch." Assuming that Blechman was sincere in his interesting
paying for the girlfriend's housing expenses, his plan needed to function
differently to ensure that eligible assets were funded into the trust to make
that happen. As it ended, the family was faced with a lack of clarity that
ultimately required the courts to sort out.
This article is published by the
Legacy Assurance Plan and is intended for general informational purposes only.
Some information may not apply to your situation. It does not, nor is it
intended, to constitute legal advice. You should consult with an attorney
regarding any specific questions about probate, living probate or other estate
planning matters. Legacy Assurance Plan is an estate planning services-company
and is not a lawyer or law firm and is not engaged in the practice of law. For
more information about this and other estate planning matters visit our website
at www.legacyassuranceplan.com.
This article written and published by:
8039 Cooper Creek Blvd
University Park, Florida 34201
844.306.5272 (Phone)
info@legacyassuranceplan.com (email)
I have read all the comments and suggestions posted by the visitors for this article are very fine, We will wait for your next article so only. Thanks!
ReplyDeleteestate planning new jersey