Planning for Disability
March 2009
How an ailing tycoon's after-death wishes were
bungled by poor estate planning
When he was of sound mind, real estate developer Max Farash was a generous man,
and his charitable foundation has given away millions to worthy causes over the
last ten years. Long before dementia ravaged the 95-year-old's once-sharp business mind, Farash
drew up plans to transfer, upon his death, most of his wealth – valued at $200
to $500 million – to his charitable foundation. The Rochester, New York, multimillionaire also had left instructions that
several residential properties in New York and Florida should to go to his
daughter, Lynn, upon his death. For Lynn, these "heirloom assets" hold cherished
memories of time with her family. But Farash's plans didn't take into account that a third party would intervene
and force the millionaire's charitable wishes to deprive his only child of an
inheritance he wanted her to have. This case is a great example of failing to plan for disability. A
well-structured living trust with disability provisions could have accomplished
Farash's goal, kept his disability private and saved his family hundreds of
thousands of dollars. Guardian Collects Millions in Fees. After Farash was declared legally
incapacitated two years ago, the court appointed an attorney, instead of
Farash's daughter, as the ailing man's guardian. In his first year as guardian,
the attorney claimed $1.5 million in fees from Farash's estate and is asking a
probate judge to allow him to sell off Farash's valuable real estate to benefit
the foundation, despite Farash's clearly written wishes in his will that the
homes should be left to his daughter. The attorney claims that keeping the properties is a burden on the estate, and
that the $140,000 spent annually to maintain these homes should be set aside to
benefit the foundation. The attorney has offered to pay Lynn Farash the sales
proceeds when her father dies, but she'd rather have the homes for their
sentimental value. A Simple, Two-Step Solution. This case underscores the dilemma of
court-appointed guardianships, as they can cause people to lose control and
incur needless costs. Farash could have avoided the legal nightmare for his daughter if he had done
two things:
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hired an attorney to draft a proper revocable living trust, and
-
hand-picked a successor trustee to manage his estate in the manner he wanted.
Such simple steps are not reserved for the very rich; they can avoid court
involvement in your affairs as well, and your children or other heirs can be
assured of receiving the family's treasured assets as you intend.
Adapted from the Daily Plan-It newsletter. Hoopes,
Adams & Alexander, PLC, is a Chandler, Arizona, law firm offering services to
Phoenix-area clients in the areas of estate planning, entity formation,
commercial and real estate transactions, and civil litigation. |
