April 22, 2013   Estate Planning

Estate Planning Ruminations from the Cupboard under the Stairs

By Maria C. Schmidlkofer, J.D.
estate planning considerations Estate planning is a serious business. Meeting with clients often dredges up emotions and issues in the family that are necessary to discuss in order to fully discover a client’s goals and values and to design a plan that successfully transitions the family legacy from one generation to the next. 

Estate planning concepts can be more enjoyable to learn in a hypothetical situation, however.  I was reminded of the Harry Potter series recently when I read of Richard Griffiths’ death at age 65. Mr. Griffiths’ character was Uncle Vernon Dursley, one of the series’ minor villains.  Uncle Vernon prevents Harry from developing into the person Harry was meant to be. I challenge you to think about this scenario and ask yourself if the fantastical world of Harry Potter hits home with outcomes that you would want to avoid by implementing proper estate planning.

1. Name Guardians for Your Children
Please execute a will naming guardians for your children. Sometimes parents cannot agree on which family member should be the guardian who takes care of their children in case of death.  However, many family members would be better choices as guardians than the worst family member. A judge has no way to evaluate who the Aunt Petunia and the Uncle Vernon Dursleys of the world are.  On paper, they look wonderful. They live in a nice neighborhood. They are gainfully employed, are respected by their fellow citizens, and have a child around the same age as Harry.  It is very reasonable for a judge to think a couple like Vernon and Petunia would be a great choice.  The Weasleys would have been an excellent choice as guardians with their strong familial bonds and loving nature.  However, a judge would most likely select a child’s aunt as guardian over a close family friend.  While family dynamics may be kept in the family, outward appearances are frequently different from reality. Who would be the best person to raise your children in line with your family values?

If you cannot pick a guardian or agree on guardians with your spouse, a great solution is to name several loved ones to serve on a “Guardianship Panel.” The panel members are empowered to name the guardians and present their decision to the judge if a guardian is ever necessary.  You can provide the Guardianship Panel with guidance through a letter of instruction. Furthermore, you can even name preferences for them to evaluate potential guardians based on the facts and circumstances at the time of your death.  Guardianship Panels work well because they are so flexible.  They work if your child is four or if your child is fourteen. They can take current issues into account and decide what is in the child’s best interest if and when the time ever comes.  Think how much different Harry’s first ten years in the story would have been if he had been raised by the Potters’ good friends, the Weasleys, instead of his wretched aunt and uncle. Sharing a room with Ron definitely looks better than Harry’s room under the stairs at the Dursley home.

2. Leave Adequate funds to Care for Your Children
Money should not be a barrier to picking a guardian. It is your job as parents to make sure your children will be financially secure in the event of your death. Many people do this by buying term life insurance in the event that they pass away before building up sufficient assets for their loved ones.  Lily and James Potter left Harry thousands of gold galleons at Gringott’s Wizarding Bank.  However, they failed to provide any guidelines for stewardship of the inherited funds and neglected to identify who had access to the funds for Harry’s care.  Indeed, Harry was not even aware that his parents had left funds for his support until he was eleven years old. The first ten years of his life he was left to scrounge with hand-me-downs from his step-brother. 

3. Protect the Assets that You Leave Your Children
There are no restrictions or oversight for Harry to spend the piles of gold left by his parents.  A proper trust fund would have provided a Trustee with guidance to spend the funds for Harry’s benefit for items that his parents thought were important. Trust distribution guidelines help the Trustee decide whether distributions are appropriate, so the more detailed a parent can be, the better. With comprehensive trust guidelines you can inspire and empower your children to use their trust funds for valuable and meaningful endeavors.  For example, funds may be used to go to school, establish a business, get married, adopt a child, build a home, travel, take self-enrichment courses…the list is limited only by what you wish to encourage your children to aspire to.  Fortunately, Harry is naturally conservative and does not waste the inheritance his parents have left him.  The human side of Harry Potter is perhaps even more fantastical than the magical side of Harry. Few eleven year old children would do the same because they have not yet matured enough to discern the best way to spend their funds. The Trustee’s guidelines can inspire your children to become productive citizens and learn the principles of money management and stewardship.  The guidelines should also be flexible enough for an Independent Trustee to authorize spending on something unforeseen, such as fighting a magical dark lord.

4. Provide Mentors for Your Children
If James and Lily had left instructions for Sirius to be Harry’s mentor, Harry would have had a much better grounding early in life. He would have been better prepared for entering school at Hogwarts and dealing with his wizarding powers. A comprehensive estate plan can and should include honorary positions for family members and trusted friends to stay involved in your children’s lives as mentors and advisors, even if they are not named as guardians. 

I hope that a Harry Potter hypothetical provides an easier way for you to relate to estate planning considerations when planning for your own children.  On a personal note, you just might want to tell your children now, if magical powers run in the family.

About the Author
Maria C. SchmidlkoferMaria C. Schmidlkofer is an associate attorney at the Law Office of Eden Rose Brown.  Her practice emphasizes values-based estate planning for families and individuals.  For more information call 503.581.1800 or email Office@EdenRoseBrown.com. www.EdenRoseBrown.com.

This information was prepared by Law Office of Eden Rose Brown and is intended only to provide general information.  It is neither offered nor intended for use as legal advice, nor is it a substitute for a consultation with an attorney.  

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