Jennifer\’s Story – A Fiduciary\’s Tale, Part 2
If you recall from Jennifer’s Story Part 1, Jennifer’s parents, Bill and Carla, were in a terrible car accident but had healthcare powers of attorney on file with their primary hospital and had designated each other as primary agents, and then Jennifer as the tertiary successor agent. Yet, no agent was listed as a back-up for Jennifer who was unavailable at the time of the accident. Bill and Carla were taken to the nearest hospital and were in critical condition upon arrival. Emergency measures had to be instituted immediately. Fortunately, Bill had his cardiologist’s card in his wallet. Also, Carla’s primary care doctor practiced in the same hospital as Bill’s cardiologist. However, both doctor’s were not in the hospital during the time of the accident; so they were being paged. Jennifer’s estranged brother, Alex, learned about the accident from his grandmother and went to the hospital post-haste. Accordingly, the hospital, when faced with an emergency where the agent is incapacitated and the successor agent is unavailable, followed its standard policy and began consulting with the “next of kin,” Alex. The doctor described the situation to Alex and the fact that Bill probably had a heart condition. Alex told them to do whatever they thought was best. This was 30 minutes before Jen’s arrival. When Jen entered the ER, she came upon the doctor explaining to Alex that the medication initially administered to Bill caused a severe reaction and, consequently, more emergency steps were needed to arrest the seizure. The seizure had subsided and Bill’s medical records had also arrived. However, damage to Bill’s heart was a great likelihood, as his blood pressure skyrocketed before and during the seizure. Furthermore, the seizure had made the overall stability of his condition much worse. Jen knew that certain medications would trigger this seizure and the information was, in fact, on his healthcare power of attorney. However, this was an emergency. Still, what if her father doesn’t fully recover? Who is responsible? Jen is about to ask and learn… Stay tuned… Jennifer\’s Story, A Fiduciary\’s Tale, Part 1 | 2 | 3
1 Easy Best Practice to Execute before the New Year
As we continue reviewing estate planning fundamentals, let’s consider last week’s Best Practices Estate Planning tip posted on Facebook: “Every adult, regardless of age and income level, needs a healthcare power of attorney.” Young adults, and even their parents, may think this is going overboard, especially if they live at home. Yet, an adult with capacity has the right to make healthcare decisions on his or her own and also has a right of privacy regarding those healthcare decisions and his or her medical information. Recently, the Health Insurance Portability and Accountability Act (HIPAA) was revised, increasing the privacy guards around the release of medical records and, thus, making it much more difficult for parents or next of kin to obtain this information and, especially to make medical decisions for adult children, without the requisite authority. Human beings experience a myriad of conditions and ailments, some of which we do not want our parents to know about, some of which we only want our parents to know about. Conversely, parents should share important medical history with children, so that children are well-informed about potential conditions that they or their children could experience as a result of inherited genes. Sometimes we don’t know about an inherited medical condition until an accident occurs. If, however, Mom is in an accident and hasn’t designated an adult child a Personal Representative on the HIPAA form, her adult child may not learn this important information. Like the property power of attorney, the healthcare power of attorney is a critical document for single parents with minor children. A minor child cannot be a healthcare power of attorney agent or a HIPAA personal representative and, if a minor is one’s only next of kin, then the document is even more important. Also similar to the property power of attorney, the agent’s authority for a healthcare power of attorney does not have to be effective immediately. However, language should consider emergency situations. Finally, if you’re considering separation or divorce, you should seriously consider executing powers of attorney that designate someone other than your spouse as the agent and personal representative. Do you really want someone who is going to be an ex-spouse to have the authority to “pull the plug”? So to round out the knowledge and authority needed for minimum estate planning protection, be sure to start the New Year with your property and healthcare power of attorney signed and tucked away.
Estate Planning and Bologna
It’s National Estate Planning Awareness Week, so this article digresses from the Marriage Equality Government March series that began last week. The regularly scheduled program will resume next week. This article is about estate planning sandwich meat, in particular, 3 common servings. “I have more important things to worry about.” Colleagues and I often share “war” stories about the one that got away: the potential client who cancelled an appointment and then went on a fabulous vacation. We shake our heads because the scary anecdotes we tell clients about what happens when families fail to plan are not just Halloween pranks, they’re the stuff law students study. Still, no one ever thinks it will happen to them or their families until someone is seriously injured, diagnosed with a catastrophic illness, or dies. Then, because of procrastination, certain wishes may not be possible and what would have been unnecessary legal services will be unavoidable and potentially more expensive. If you can think of something more important than having genuine peace of mind or maintaining family harmony while you’re going into surgery, do share. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ “I don’t need an estate plan; I don’t have anything.” In fact, you do have an estate plan. If you’re in Illinois, it’s the one the state created for you in 1975, called the Probate Act. Perhaps you don’t need a will or a revocable living trust, but I’ve yet to meet an adult who doesn’t need powers of attorney. Also, I haven’t met a parent with a minor child who doesn’t need a will. Finally, even if you “don’t have anything,” is it fair to burden loved ones with emotionally challenging decision-making and bills were something to happen to you? For individuals with modest estates, a little life insurance and powers of attorney can go a long way. Thus, yes, you do have “something.” Chapter 755 of the Illinois Compiled Statutes, Act 5, Article 2, Section 1 says so. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ “I can’t afford an estate plan.” Millions of people in this world go without buying quality items for a long time or ever. The decision-making process is similar to the one used when buying shoes. My elder family members – men and women – always cautioned me about shoe purchases. “You only have one pair of feet to last your entire life,” they warned. So was I going to buy cheap shoes and then pay a ton o cash to the podiatrist or buy good shoes and save a ton o cash in the long-term? Similarly, buying a will in a box or online are reasons why probate courts and lawyers who specialize in probate can end up with a ton o cash and why property goes unclaimed and why families feud. So, what kind of shoes do you like? Better yet, what kind of shoes do you want your children to buy? ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ It’s National Estate Planning Awareness Week; the same week will occur again next year; and most who need to act will not have acted by then. However, if one person does act after reading this article, whether by contacting me or another attorney, then it will be worth it to them and their loved ones; and I will have made one more person proactively aware.
The IRS Takes a Bite Out of DOMA, Part 1
Recently, on a panel at a Chicago Bar Association’s Trust Committee meeting, I discussed tax and estate planning issues in light of the U.S. Supreme Court case, U.S. v. Windsor and the new federal agency rules on same-sex married couples. This article is Part 1 of a 4-part series from that discussion. Before Windsor, preparing estate plans for same-sex couples was often complex, especially if the couples were married, in a Civil Union, Registered Domestic Partners, or long-time partners in a substantially similar relationship when compared to opposite-sex married couples. The so-called Defense of Marriage Act (DOMA) compounded the complexity by prohibiting federal agencies from recognizing the couples and spurring states to create mini-DOMAs. The disparate treatment forced same-sex couples with sizable estates to literally give away large portions of their assets, either in the form of charitable donations or tax payments. However, even couples with very modest estates were required to have powers of attorney and related directives prepared with painstaking creativity. Finally, when most couples, despite their estate\’s size, asked why their planning was so complex, they listened to how their families were “different” and warnings, such as “though a valid legal document, don’t use this in Texas,” or “don’t have an accident in Will County.” Generally, creating a joint will for same-sex couples, even those lawfully married, was and still is a risky undertaking because the relationship was not federally recognized and is not recognized by a majority of states. Even in states such as Illinois where Civil Union couples have the same benefits of as opposite-sex married couples, including testamentary benefit, some counties are nonetheless hostile. Thus, a surviving partner presenting a joint will in a probate court of such a county might face an uphill battle. Setting the issue of joint wills aside, but considering will provisions, the unequal treatment of same-sex couples required careful tailoring of what could be boilerplate provisions in wills for opposite-sex married couples. The tailoring and special provisions include: Family Article; A statement of intent; Definitions providing expansive and inclusive meanings for “child,” “partner,” Civil Union, Registered Domestic partner, spouse, next of kin, and marriage; Prospective guardianship and successor guardianship language; A no-contest provision; A pour-over provision; A definitive choice of law statement; A notary seal, though notarizing a will is not required in Illinois; and more. I mentioned the pour-over provision because even if the family is of modest means, contentious behavior from another family member would warrant a trust also be prepared as a second line of defense for fighting contention. This is not the case for married opposite-sex couples because the opposite-sex surviving spouse would, at least initially, have the law squarely on his or her side as a second line of defense. If a same-sex couple of modest means could not afford a trust, and some could not, then they would try to plan for transferring all assets by operation of law and hope that a family member with a small estate affidavit didn’t show up to claim for the forgotten bank account. For the sake of example, let’s say a trust was prepared. One positive sliver for practitioners and our clients was that we didn’t have to worry about the reciprocal trust doctrine or unlimited marital deduction (IRC 2056) issues. But that was just the point: Because of the unfair treatment by the government, our clients could not take advantage of the unlimited marital deduction, federal QTIP elections, gift-splitting, or portability. So provisions had to be drafted carefully to work-around this lack of spousal gifting benefits. Additional provisions and mechanisms for trusts included: Expressly prohibiting a contentious family member from acting in a fiduciary capacity Providing the trustee and successor trustee with HIPAA rights; Providing the trustee with authority to take reasonable steps to ensure transfer of retirement assets to the same-sex spouse or partner result in the least adverse tax implications for the surviving spouse or partner; Using life insurance trusts; and Thoughtfully and diligently considering the “common disaster” provision. As mentioned earlier, other directives, agreements, and documents were and still are critical. These instruments include HIPAA release forms; a hospital visitation authorization form; reciprocal powers of attorney with 2 disinterested witnesses per instrument and with each instrument notarized but with a warning about describing the relationship depending on the county (imagine – having to hide your relationship in case of a medical emergency in order to ensure your spouse’s medical treatment!); reciprocal living wills; and reciprocal Illinois Mental Health Treatment Declarations. Many colleagues might say that possessing all of these documents would be redundant, and they would be correct…with respect to opposite-sex married couples. However, for same-sex married couples possessing all of these documents is evidence that strongly supports the commitment between the 2 individuals and, thus, their testamentary intent. Thankfully, Windsor and the subsequent flurry of guidance from government agencies took a bite out of DOMA; and stay tuned for Part 2 of this series, which will cover that guidance. One nation with justice and liberty for all… The IRS Bites DOMA, Pt 1 | 2 | 3 | 4
Talk Tips You Need for Aging Loved Ones Who Need Planning
Well, it starts like this… About a month ago, a friend’s husband came home from his evening workout at the gym with a look that wasn’t his usual “victory!” or “whipped puppy” face. She told me he looked deeply distraught, so she patted the area next to her on the sofa, turned off the TV, and asked, “What’s wrong?” He then told her about how one of our nicest neighbors, who was only 48 years old and in outwardly good health, bicycled to the gym that morning for his usual work out and minutes later collapsed from a heart attack and died right there. Our neighbor had a lovely wife and son who was a high school senior. At 48, he was assuredly looking forward to more graduations and maybe grandchildren. But for him it wasn’t to be and 48 is not old. I have more tragic stories but will stop this one here and say that this is a good place to start “the conversation” with parents or loved ones who you know need planning. Also, you should plan to have more than one of these conversations if you really want to see the most positive results – a plan prepared that brings peace of mind to your loved ones now and later. So that’s how you start the conversation – with a scary story. Mom has the velvet hammer. The next question is who do you start the conversation with? Let’s say both parents are living and still together; well, you start with the parent or family member who is most persuasive in obtaining results that affect the entire family. Dad, can you pass me the embalming fluid? You must also decide when the conversation should take place. I wouldn’t suggest having a discussion about death at the dinner table. Nor would I suggest entering into it like an intervention. This is a difficult topic already, so don’t make it more difficult. Start the sharing when you usually share stories about your day or your friends’ days but away from the dinner table. What if you never really shared before? Write a letter then start sharing. Planting the seed. When you do share a scary story, one of 2 things will happen: Either your loved one will want to know more or he or she will express sympathy and change the subject. If Mom or Dad wants to know more, then pick the tone up with whatever positive note you know, such as, “Yes it’s sad, but at least he had life insurance and a will.” Then stop. Of course, the logical progression is, “So Dad, do you have a will?” But by stopping and changing the subject yourself, you’ve done what my mother calls, “planted the seed.” Now Mom or Dad may want to continue the conversation, which is what we really want. But if he or she doesn’t, we must let it be. The seed has been planted. Next, it simply needs nurturing. Mom, meet The Joneses. We nurture the seed by watering the soil and waiting about a week or 2. After that time has passed, we bring up a related topic about one of their close friends or relatives who is in a comparable financial situation. This presumes that we know something about the friend’s or relative’s financial situation. It could be something similar to, “I ran into Ms. Jones the other day and she told me about the vacation home she and Mr. Jones just bought.” Then continue talking about how their children really enjoy being able to have a nice place to stay when they want to enjoy their “down time.” If the Joneses don’t nudge them into further conversation, somebody will – maybe you. Parents are proud when their children achieve more than they, but parents also want to be recognized for “knowing” or “experiencing” more along the lines of wisdom. So if you, his or her “child” has enough about herself to have a solid power of attorney, then surely “the tree will ensure that this document is in place so as to affirm the apple’s lineage.” Thus, as I said, having the conversation actually means having a series of conversations. This allows you to gently uncover any uneasiness and fears in a comfortable and safe environment. However, what if time is of the essence? Mom or Dad’s health is declining and action is needed sooner rather than later. We must then step out of ourselves and, as is often said by professional caregivers, “meet them where they are.” You can do this by imagining yourself at 75 or 85 years of age. You’re not as strong; you’re not as fast; and your income potential is 1/10th of what it once was. Friends and family members are dying and it is becoming more and more difficult to hide all the silver strands on your body. By earnestly stepping into the shoes of our aging loved ones, we realize the competing interests that come into play for them. On one hand there is the rational acknowledgment and desire to plan and on the other hand is denial based on fears caused by the ultimate lack of control over their mortality and that they will run out of money. Losing control is fundamentally a trust issue. And if loved ones don’t trust you, establishing that trust when they are vulnerable is going to be very difficult. This is where we must “meet them where they are.” Control isn’t just about money, either; also, it’s about dignity. This encompasses bodily integrity, mobility, and ownership and usability of their “stuff.” Here every person is different and respecting what our aging loved ones need to retain a feeling of dignity will, yes, lead to getting them to plan and sign papers. But first thing’s first. Address the issue of their need to control – to feel independent, to maintain their human dignity. Explain why you’re suggesting a caregiver once weekly, or a cane, or a
Wealth Preservation: When Your Pocket Shouldn’t Be the Payroll
People often confuse estate planning with wealth preservation, aka “asset protection.” The confusion is understandable for 2 reasons. First, estate planning and wealth preservation have overlapping areas and considerations. Second, and probably the most popular reason is that legalese is confusing when it refers to almost everything. Estate planning, while it involves planning for asset maintenance during your lifetime, that planning typically addresses emergencies. Accordingly, the documents needed are powers of attorney and medical release forms. Some trusts may also assist in asset maintenance, such as Qualified Personal Residence Trusts (QPRTs) and even revocable living trusts that provide income during the life of the beneficiary/trustee. However, estate plans generally address the transfer of assets to loved ones upon death. Wealth preservation, conversely, addresses the issue of keeping and enjoying the fruits of your labor during your lifetime and, most importantly, keeping it out of the reach of others. Many individuals think that the big other is Uncle Sam. The contrary is true. Most lawyers who prepare wealth preservation plans repel the idea of tax evasion; it’s against the law. Do we use the law to help minimize tax burdens? Yes. But the operative phrase is “use the law” not evade the law. Thus, we only work with clients who are willing to comply with tax laws and if potential clients don’t like the sound of that, those of us who want to keep our licenses, gently tell those potential clients to seek counsel elsewhere. The “others” we really want to keep away from your “fruits” are menacing, frivolous plaintiffs. These plaintiffs are individuals who believe that because you work in a particular profession, that they should be on payroll even though they don’t deserve a penny of your earnings. Usually, the clients who confront menacing plaintiffs are either business owner or those in “high risk professions” that attract unwarranted lawsuits – doctors, lawyers, architects, engineers, and hazardous chemical delivery. Occasionally the lawsuits are valid and settlements are reasonable and on other occasions, the lawsuits are unwarranted or the settlements are egregiously large, causing the defendant to lose everything. To prevent financial disasters such as this, clients seek the services of attorneys who provide wealth preservation services that include a number of strategies: Liability insurance in the millions of dollars. A Limited Liability Company (LLC) or a Family Limited Partnership (FLP) and if one is nearing retirement, we look to maximize retirement earnings being mindful however, that retirement vehicles are often emptied in large risk events such as a litigation settlement; A Domestic Asset Protection Trust (DAPT) in a state that allows DAPTs and to ensure that you have a substantial relationship to that state. FYI – Illinois is not a DAPT state; and An international trip to a jurisdiction that allow offshore trusts whereby the financial institution is the trustee and you are the beneficiary. Admittedly, many individuals don’t like the idea of living in one country while most of their assets are in another but when they learn of the thousands of frivolous lawsuits that are filed because a plaintiff thinks they should have a payday of which they are non-deserving, some change their mind. Hopefully, you found this helpful and have started planning for both your today and tomorrow, as well as the tomorrow of your loved ones, and the plan isn’t being an unwarranted payroll.
Dueling Executors
Frequently, I answer questions on Avvo about estate planning and related topics. A little while ago, someone asked a question about the validity of a will that was “poorly written” and disputes between co-executors. This article expands on that answer. A will is considered invalid if its \”formalities\” are not followed. The formalities are that the will be signed by 2 credible witnesses while in the presence of a legally sound adult testator (person who makes the will) when he or she signed the will. So, Skyping or video signings are not allowed, at least in Illinois. In addition to being credible, witnesses must also be adults and “disinterested.” A disinterested witness is one who is not a beneficiary, either primary or contingent, under the will. If a potential beneficiary or the spouse of a potential beneficiary acts as a witness, then 3 witnesses should be used. Sometimes it is difficult to equally divide estate assets to an exact amount, which is why attorneys use \”substantially equal\” or \”as equal as possible\” with respect to distribution language. Presuming a disputing co-executor has a copy of the will, the will’s terms should define how disputes between co-executors should be handled. If the will is silent on that issue, then a case of breach of fiduciary duty may exist because an executor, even if also a beneficiary, has an obligation to all of the beneficiaries, not just himself of herself. However, Illinois courts have started looking very closely at the terms of the instrument and the facts surrounding disputes. Additionally, courts are interpreting wills and trusts from a contractual perspective, going so far as to state one executor did not have a fiduciary duty. Thus, breach of fiduciary duty may now be a very difficult claim to successfully make. A will is typically invalidated on grounds of undue influence, i.e., someone took advantage of the testator’s mindset while he or she was making the will, or other similar grounds. A validly executed but poorly written will is not a reason to invalidate the will as a whole. Even if a provision of a will is deemed invalid, a court will likely strike the provision as invalid but maintain the validity of the rest of the instrument. Feel free to check out my Avvo answers on our website.
The IRS Recognizes Your Marriage Even if Your State Won\’t
Last week, in the wake of Windsor v. U.S., the IRS issued Revenue Ruling 2013-17. A Revenue Ruling, or “Rev. Rule,” is similar to a court opinion; it\’s just IRS law instead of case law. Thus, Rev. Rule 2013-17 mandated equal tax treatment for all lawfully married same-sex couples in ALL of the United States of America. As discussed here previously, in Windsor, the Supreme Court struck down Section 3 of the so-called Defense of Marriage Act (DOMA), which provided that the definition of marriage for purposes of rules, regulations, and laws promulgated through the federal government was the legal union of one man and one woman as husband and wife. The Windsor decision was a great step forward in ending discrimination against a segment of the U.S. population; however the decision was incomplete because it left standing DOMA\’s Section 2 that provides that states do not have to recognize same-sex marriages. As a result, Windsor v. U.S. left an even messier patchwork of laws for states and the federal government to wrestle with in regards to marriage equality. The question in Windsor was whether the IRS wrongfully denied issuing an estate tax refund requested by the surviving spouse of a married same-sex couple. The IRS lost in the lower court and SCOTUS affirmed that court\’s decision by striking Section 3. Having not prevailed, the IRS then had to determine how to comply with the Court Order. Had the IRS decided that tax return filings were to be based on domicile, then it would have been aligned with Section 2 of DOMA. Same-sex married couples residing in “unfriendly” states would have had to ignore the fact that they were legally married and file as “single.” So the IRS could still have chosen a less than friendly route for same-sex marrieds. However, recognizing the spirit of Windsor, Rev. Rule 2013-17 mandated equal treatment of married same-sex couples by basing the filing of returns on place of solemnization: \”For Federal tax purposes, the [IRS] adopts a general rule recognizing a marriage of same-sex individuals that was validly entered into in a state whose laws authorize the marriage of two individuals o the same sex even if the married couple is domiciled in a state that does not recognize the validity of that same-sex marriage.\” (Emphasis added.) What exactly does this mean overall? It means that lawfully married same-sex couples can live in unfriendly states and file taxes for the federal government using “married filing jointly” or “married filing separately.” Unfortunately, they still must abide by state tax return rules but at least they don’t have to move. What does this mean for same-sex couples in Illinois? If you were legally married elsewhere, e.g., Iowa, but reside in Illinois, you can file federal and state taxes using your legal relationship status and file “married filing jointly” or “married filing separately.” If you are in a Civil Union, you can\’t file your federal taxes as a married couple but you can file your state taxes as a married couple. Agreed: Illinois needs to get with the program and provide marriage equality. Summarily? While SCOTUS purportedly left the issue of validating same-sex marriage to the states, at least some federal agencies, such as the IRS, that actually must perform the work SCOTUS decisions create, recognize the \”United\” in U.S.A. and are willing to pass laws accordingly.
3 Reasons to Be Stingy
The primary problem with financial accounts held jointly is that one cannot predict the financial outlook of another person. These days, we can barely predict our own financial future, let alone anybody else’s, even if that person is a spouse. People still, however, assume that married couples are safe when they join finances, but let’s look at Keith and Richard. As newlyweds, Keith and Richard were head over heels in love. So when the CPA suggested that they keep their own separate accounts and establish a joint account for household expenditures, they smiled and told her she didn’t understand how they wanted to share everything. Ms. CPA just politely smiled back. Several months later, Keith phoned her to find out how to recover money from long overdue child support payments that were taken out of his and Richard’s joint account by Richard’s former partner who lived across country and was the mother of his child. The CPA recommended that Keith contact a lawyer who specialized in child support issues. However, the damage was done; even if the lawyer could recover what was withdrawn, Keith still had to pay the lawyer. So Keith also started thinking about calling another different kind of lawyer. Next: It\’s typical and, at first glance, reasonable for a senior loved one to place a younger family member on the senior’s account jointly. Grandma Adams may say to her granddaughter, “Liz, if I get sick, I want someone to be able to pay my bills and take care of me.” Liz says, “OK, Grandma.” Liz has the best intentions in the world because she has a nice job and doesn’t need Grandma’s money. However, what Grandma and Liz don’t know is that Liz is about to be laid off because her company just lost its best an only client and, as a result, must shut its doors. Liz has a car note, insurance, credit cards, and charge cards. Even if Liz doesn’t touch Grandma’s money, Liz’s creditors can if she stops making payments. Elderly parents, like grandparents and for the same reasons, also consider it a good idea to allow children to be on their account jointly, even if the parents have more than one child. Yet, what if the parent wanted the children to split everything equally upon the parent’s death? Do we really believe that Chloe isn’t going to keep all of the remaining money in the account to herself and not split it with her brother? The best way for an elder to manage this issue is to designate someone as an agent under a property power of attorney. That way, he or she must comply with a higher standard of legal ethics, must keep detailed records, and the agent\’s creditors cannot touch the principal’s funds.
Charitable Trustees Beware
Cycling to the office this morning, I passed a woman jogging while pushing a 3-wheeler stroller jogger with twins in it. My mind meandered as to how challenging it must be to care for twins and let’s not even talk about triplets! But I couldn’t help it… Hope and Bill had triplets: Gray, Jay, and Faye. Bill couldn’t handle the stress of 3 terrible twosies, 3 tumbling toddlers, 3 precocious pre-teeners, and 3 hormonally tangled teenagers, so he divorced Hope when the triplets were 15 and went on a permanent excursion to chant in the Himalayas. Hope, not one to be deterred, called on her siblings, Charity and Joy. All was going well until Hope suddenly became ill and, at the young age of 44, passed away, leaving 3 teenagers with no parent. Bill had never been heard from since he left with snowshoes in hand. However, Hope left a will and a trust, naming Charity as trustee and Joy as guardian. When Hope passed on, though she didn’t have a taxable estate at $4 million, she left a considerable amount to her children and her sisters: $1 million to each child and $500,000 to each sister. After the trauma of losing their sole parent had waned to a manageable, moving forward, level, May, Faye, and Jay continued planning for college. Faye was especially excited because she had been accepted at her first choice for engineering. Well, 3 years into her engineering program, Faye and a few other classmates decided to start a small technology company. Each classmate pledged $100,000.00 as seed money and each had the means to fulfill the pledge. So Faye phoned Charity, who was vacationing in the Cayman’s, told Charity about the new venture and asked for her pledge money. She knew that her mom had left enough for her in the trust at this stage – Hope had staggered mentoring provisions in each child’s trust – to more than meet the pledge and that Charity was to invest for the purpose of conservation and then growth. What Faye didn’t know, however, was that Charity was very charitable to herself, using not only Faye’s trust, but May’s and Jay’s as a source of charitable giving. Charity told Faye that it would be a little difficult to come up with the $100,000.00 straight from Faye’s trust, but that she would borrow from May and Jay and help Faye meet the pledge. Faye, the oldest by 10 seconds, didn’t like what she heard and a heated argument ensued. It ended with Aunt Charity telling Faye to calm down or else she wouldn’t get anything because she had discretion over the distribution and there was nothing Faye could do. In fact, Charity decided to make the Cayman’s her home and wasn’t sure when she’d be returning to the states to give Faye the distribution. But Charity was wrong; Faye had the law on her side and Charity was eventually extradited to the U.S., where she faced counts of fraud and breach of fiduciary duty. Faye and her classmates’ business boomed; she eventually coupled with a partner and had a child aptly named, Prudence. The Prudent Investor Rule: A trustee administering a trust has a duty to invest and manage the trust as a prudent investor would considering the purposes, terms, distribution requirements, and other circumstances of the trust.