Do You Need An Irrevocable Trust?

Christmas is around the corner, so here are some thoughts on the characteristics of a good gift.

Most people want to leave their assets to their children in equal shares. This is the default distribution specified by the probate code, and in general it’s a fair and equitable way to do things. There are instances, however, when what is fair is not equitable.

One year ago my wife and I had quadruplets. We kept two, and we lost two. This is the second in a series of blogs addressing our experience from an estate planning perspective. When you can’t afford something, you insure against it. Like most young families in our stage of life, we couldn’t make it financially without my income. Which is where life insurance comes in. When we learned about the quads, our policy coverage was one of the first things we revisited. How much life insurance should you have? If collecting would feel like winning the lottery, you have too much! For a growing family, life insurance should function as a stop-gap measure until the kids are grown and the surviving spouse is able to return to work. When calculating the coverage you need, don’t just count the face value of the policy. Instead, also consider the income the policy should be expected to generate if invested conservatively. For example, a million dollars earning 3% a year will yield an annual income of $30,000. Before this, with only two children, we’d always assumed that if I was left alone I would still be able to work, at least part time. Accordingly, the policy on my life was double that of my wife’s policy. With quads, this analysis changed radically! If something happened to her, I would be left raising six young children on my own, effectively in early retirement. In the end, we doubled her policy, and modestly increased mine. Our choices were based in part on our living expenses, what was left of our mortgage, and what I expected would be left after 20 years of raising six children. Insurance is a critical part of any estate plan, particularly when young children are part of the equation. How it intersects with your trust will be the subject of my next post. Till next time, call us before you need us.

As a rule, an estate planning practice is an impersonal thing. Clients come in, I identify their needs and prepare a plan to address them. But over the past year, our estate plan got personal. In November of 2018 we learned that my wife was pregnant. In December we learned that we were having triplets. And in January…they found another one. In late May, at about 30 weeks gestation, the reality of four babies packed inside set in. A Saturday night checkup revealed no problems other than a lot of discomfort for my wife. By Monday morning, two heart beats had stopped. Later analysis revealed that the placentas had separated from the wall of the uterus, for no particular reason other than that it was just really crowded. An emergency C-Section later we had two beautiful babies; two in our arms, and two in heaven. Over the course of the pregnancy there was a tremendous amount of psyching ourselves up for the heroic task of raising quadruplets. We reorganized our home and altered our lifestyles. I lost 30 pounds. Our church and community rallied around us. Significantly, we also revisited our estate plan. Over the next few weeks I’m going to issue a number of posts exploring why we did so, what we looked at, and what changes we made. I’m also going to look at how this all relates to the average estate planning client. Our needs were obviously unique, but the process and reasoning behind the choices we made are relevant to everyone. Till next time, call us before you need us.

An aphorism is a pithy observation that reveals a universal truth. Often simplistic to the point of absurdity, they stick around for their insight and value. “If it ain’t broke, don’t fix it.” “Not all that glitters is gold.” “Possession is nine-tenths of the law.”