Oops. Yes, you read the title right. I accidentally wrote my son out of his inheritance!
Sometimes we can have the best of intentions, and yet our actions end up not being aligned.
Table of Contents
How It Happened
You see, I’ve long known about the benefits of having a family trust. After dealing with a parent passing too early from cancer, or watching some relatives deal with unexpected passings, I wanted to be proactive.
A family trust can help you control your assets, even after your own death. So, once we had our first child (my daughter), my wife and I hired an attorney to help us draft a living trust.
It was a pretty simple and straightforward document that outlined the distribution of assets, how, when, etc. At the time my daughter was the sole beneficiary should anything happen to my wife and me simultaneously.
Baby Brother Was Born
A few years ago, baby bro was born. After the elation (yeah right) of sleepless nights, nonstop feedings, and diapers, we were finally ready to update our living trust to include our son as an additional beneficiary.
It had been a few years since I reviewed the trust, but I remembered a specific section listing Kaitlyn. I thought I’d just DIY it and added in some language to include baby bro. Once I got it notarized I patted myself on the back and thought I was done!
I quickly filed it away and didn’t bother looking at it again.
DIY Disaster (almost)
As I’ve mentioned, we’ve hired a wealth manager to assist with our equities. They also have legal and accounting departments, so part of the onboarding process was to do a full review of all of our assets, estate plan (including the trust), and legal directives.
Their legal team caught this thankfully, in addition to another area that could use some updating (a technical clause). What had happened was that I completely missed a section of the trust that illustrated the distribution of assets. I was supposed to add my son in here as well. And, although I did remember to update him in another section, it would have done my son no good.
So, he’s out of the inheritance for now!
Fixing It Up
So our wealth manager has been great. She followed up with us quickly after the review and referred us to her colleague in their legal department.
I spoke with the attorney last week and I’ve authorized him to make the changes.
Once I can get it signed and notarized, my son will be officially back in!
DIY Perils
DIY (Do it Yourself) can be a wonderful thing to employ. It can save you lots of money and hassle at times.
But, as you can see from my story, DIY can also be dangerous.
When it comes to legal documents, it may be prudent to simply have an attorney do the job, or at least have one help you to review your work.
Trust But Verify
Even though I screwed this up for a few years, I’m not going to beat myself up about it.
I still trust myself, but occasionally I want to verify my assumptions.
That’s one important lesson that I have come to learn after living for 4 decades.
So remember to trust, but verify.
What Would Have Happened
So, what would have happened if my wife and I passed away while the living trust was written up incorrectly?
The likely outcome is that my trustee (person designated to control the assets) of our trust would have looked past the discrepancy. Technically they would have to follow the document to the letter of the law, but I can’t imagine my sister would deny my son 1/2 of his inheritance and give it all to my daughter.
If she really wanted to be “legit” she could also probably appeal to the court on behalf of my son, citing an unintended mistake, and misinterpreted intention.
I don’t know for sure, but that’s my best guess.
Final Thoughts
Well, writing my son out of his inheritance will someday become a fun story to tell him about. By then, all will be well and we’ll all have a good laugh.
It’s also a great reminder that we all make mistakes. It’s our human nature after all. The trick is to learn from it and keep moving forward or learn from those who’ve already done it!
So, don’t copy my silly mistake. Get educated about trusts (estate planning 101) and use a professional when you’re ready to execute.
Readers, what’s a critical mistake you’ve made in the past? How did you deal with it and what did you learn? Did you beat yourself up, or laugh?
My extended goal is to help you find your personal path to financial independence, and to enjoy the entire journey along the way.
More about me
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14 Comments on “How I Accidentally Wrote My Son Out of His Inheritance”
Well, I hope he is back in.
He is! So long as he does his homework… haha.
Such a great story, thank you for sharing it, MIchael! My takeaway is that you have the right person as Trustee, someone you trust to execute your intentions. Your children are quite fortunate to have thoughtful and thorough parents, who will jump through the procedural hoops to make sure that plans become action. You will have a few more opportunities to update your will and trust, as new chapters open up for you.
For me, my biggest mistake was ‘waiting until the time was right.’ Finally, my wife and I just pulled the trigger and put the plan on paper. Almost immediately, there were potential changes. But all that is details, the main bones of our plan are down on paper. I helped an Uncle with his Will & Trust, and he is a great-great-grandfather and who knows how many ‘step-‘ relations removed from some of his inheritors. One week he has 15 people he wants to provide for, and the following month (and crazy divorce) later it is only 13. The time may never ‘be right’ but the snapshot in time has value, too. Thanks again!
Congrats on getting your plan onto paper! That’s more than a lot of people ever do. I’m lucky that I had some great role models to follow in my family. And yes, hopefully I’ll have many more opportunities to adjust as need be.
My parents had trusts when my grown brother and I inherited their assets. From the standpoint of the heirs it is an unnecessary complication to have to transfer and dissolve the trusts. Just putting contingent beneficiaries on all accounts is much simpler for your kids. You might want to dissolve the trusts once your kids reach adulthood. Or unless you have over $22 million. Also would save you the hassle of doing all of your daily transactions through the trust accounts. You can’t do life as an individual once all your assets are owned by a trust. Some people do, but my understanding is the trust is not valid and won’t stand legal challenge if all family business isn’t done through the trust accounts. Am I off base on this, I’m no lawyer but that is how my attorney explained it to me when my dad died a few years ago.
Trusts can be cumbersome at times, but I still think the advantages outweigh the disadvantages. In addition to keeping the estate out of probate, you can also use it as a tool to distribute the assets up as you wish much easier with instructions. For example, if we simply put our kids as the beneficiaries on our assets, and we met an untimely demise right when they turned 18, they’d have a huge influx of cash and assets. With the trust, we’re able to control how much of the estate is divided out to them and when. That way the kids can benefit from the assets, but not blow it all due to immaturity. I believe we’ve structure ours to pay out when they are 21, 25, and 30.
There’s a lot of work to be done when someone passes away regardless. And, we try out best to minimize this burden for the trustee who is going to step in and help to manage our estate. Fingers crossed the kids won’t need to be involved in the trust for a VERY long time! ;)
This is freaky timing because I have been working on exactly the same type of trust to protect my kids! Good point re getting it reviewed professionally – it’s not a good idea to get such a doc wrong! Thanks for the tip!
Awesome, great job getting your docs in order!! It’s well worth the money to have it reviewed. :)
Wow good catch! I think there will be ways to fix the will later, but it will take lots of time and effort. I’m glad the company found that mistake and fixed it for you. :)
We don’t have a will at the moment, but maybe we should start thinking about it.
Yeah, estate planning is something a lot of people don’t address for a while. I hope that will change in the future because it really does simplify things for your family. :)
I’m pretty sure we paid WAY too much for our estate plan filing because I had no idea that one of our companies had added a legal aid benefit at the time we put together our will and trust, but in the end, we have a document that we’re generally confident about.
I’ve made a LOT of mistakes in the past: bought my first car new from dealership before I knew better financially, cosigned a loan for my deadbeat sibling, trusted my father and paid for his support for far too long. I “fixed” the first one by paying the car off in less than 3 years, and the second one by selling the car when he failed to keep up on payments, thankfully both were so long ago it no longer stings. The last one will sting for a long time because the opportunity costs just keep coming back to me, and the fix for that was so recent, but I know I’ll find my peace with it eventually.
Well, even though you paid too much, it’s fantastic that you have your docs in order. I feel for those who have to deal with unplanned events and weren’t prepared.
It sounds like all of your stings are super important lessons for you or those you share your story with.
Nice story, Michael!
My biggest mistake (which I wrote about on my blog) was that I didn’t pay for Comprehensive Auto Insurance for a car that was ultimately stolen and totaled. So it was a pretty big financial loss when I was in my twenties.
Back then, I beat myself up pretty bad for being so stupid. Now in my fifties, I just find it mildly amusing. :)
Wow, that’s a tough break in your twenties! Glad to hear you get a little amusement now a days. :)