Lee Allman, J.D., CFP®, LL.M.
When you specialize in estate planning for clients, your goal is to write legal documents in an irrefutable way. Never has this been so apparent, as it was in a case where I used the law to protect my client from being removed from a Trust.
Recently, I successfully represented an heir of an Irrevocable Trust where simply naming the children at the Trust’s creation could have avoided a nasty Orphans’ Court battle over the proceeds of the Trust more than 50 years later.
During the 1960s, the Settlor/Father and mother married and two sons were born during the marriage, but the couple later divorced. Several weeks after the divorce, the father executed an Irrevocable Trust naming himself, his ex-wife, and his “descendants” as lifetime beneficiaries with all proceeds divided equally and outright to each “child” upon his death.
Several years later, a third son was born from a different mother and out of wedlock. This complicated matters as Son 2 was not the father’s biological child (later proved by DNA tests) and he had little, if no contact with the father during his lifetime. The trust declared “child” so the omission of names created the opportunity for Sons 1 and 3 to exclude Son 2 claiming that he was not the biological child.
I argued that the DNA testing was irrelevant as the father’s intent at the Trust’s inception clearly intended to benefit Son 2 who had the father’s last name on his birth certificate and had received regular monthly corporate fiduciary distributions from the Trust for over 20 years when the Settlor/Father was alive.
A subsequent document purportedly executed by Settlor/Father seeking to exclude Son 2 from the Trust was not a valid revocation or amendment of an Irrevocable Trust under Pennsylvania Law. The parties underwent mediation with the parties eventually agreeing that Son 2 should receive his full share.
In this case, I successfully fought for the client to gain his inheritance, but when I execute Trust agreements, this case is always at the forefront of my mind. I encourage my clients name their beneficiaries on all documents. Sons 1 and 3 had an understandable concern to exclude my client from his Trust monies; however, the Settlor’s own actions showed he intended otherwise.