I got a new case recently where the person who died had a Suze Orman will and trust. Let’s just say, in legal terms, it’s all messed up!
Before I go on let me make clear that Suze has a well deserved reputation as a financial guru. She has helped millions of people get their financial houses in order and that’s great. However, to quote LaVar Ball, “stay in yo’ lane.” Or as I have heard the kids say, “do what you do.”
Also, let me make this clear this is a public service announcement as I do not do estate planning myself. I am not telling you of these problems so you call me for your estate plan because I don’t do that work. I only clean up messes after death! So let’s get on with it….
In this case the decedent did not get the house deeded into the trust but they did manage to make the beneficiary of mom’s IRA pay to the trust. This is the exact opposite of what most people (other than people with minor children) want. That is deeding the house to the trust is a key element for avoiding probate which is the main reason most people do a trust. The IRA beneficiary issue is a loaded gun but basically there are significant tax issues to be considered and I am not sure if Suze went over those with the woman!?
Oh ya, and the trust distributes a lot of the assets to other people, other than the adult children, and it’s not clear if that’s what mom wanted or if the trust was just written poorly. I say this because the language of the trust is not clean. Most people give 100% (or close to it) of their assets to their children and then do a back-up provision to other people. Then maybe a “disaster clause” if the kids aren’t alive then everything goes to some named people. In this case there was a specific gift of the house to the children but the next paragraph was a residuary clause which gave all other assets to a bunch of people. That may be what mom wanted but this exacerbates the above issue of the IRA being paid to the trust as two of the beneficiaries live abroad and one is a minor.
In the end we are going to probate court to get the house put into the trust which is what I do for a living. We will utilize a California probate code section 850 “Heggstad” petition which should work since the house was mentioned by address in the trust. However, this will cost the family thousands of dollars… way more than a proper, attorney drafted, trust would have cost in the first place.
The documents, as comically short as they are, do manage to squeeze in a photo of Suze though. I find that sort of funny.
Oh ya, and another document that a lot of California estate planning attorneys do is a “general transfer” or other intent document which states that the person intended for all their assets to be in the trust. That can help with after death clean up but I don’t see that document. Having it makes our Heggstad petition more likely to be approved after death. So you never want to rely on a general transfer but it is an important document to have in your estate plan.
In conclusion my suggestion is you get your trust done by an experienced estate planning attorney and not Suze Orman. While a Suze Orman, or other simplistic trust form, might work I think you have a much better chance of success using a highly experienced estate planning attorney.
Good luck to you! -John